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Dividend reinvestment

By Terry Savage on November 19, 2021 | Investments

Terry, I’m holding 12 stocks, most of which pay a dividend(ATT, KMI, GE, CBOE, and a few others)…I reinvest the dividends back into these stocks….good or bad idea…I don’t need the cash to live on…thanx

Terry Says

I think it’s a great idea. Do you hold those stocks inside an IRA? If so, the tax implications don’tmatter — as all the money will eventually be withdrawn as ordinary income.
If not, the firm that holds your stocks will keep track of those dividends, on which you pay taxes every year. That will reduce your eventual capital gain if/when you sell the shares.



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