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Alpine Global Dynamic Dividend Message Board

  • movealldirection movealldirection Jan 24, 2009 2:55 AM Flag

    Hi Danbrady, do you happen to know...

    I have been calling Alpinewood to get a answer.

    My question is: between AOD and AGD with at least 50% tax advantage, which fund finally pays more after tax in a regular account; Non retirement?

    Someone there told me:"buy AGD."

    But the other told me:"they don't know."

    Does someone here know the answer of what the percentage more?

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    • I rated your messages as 4 star. You are not like so many probably young males, who just do the guess work.

      You have spent a lot of time and energy to figure out the truth, I really admire you as a respectable human being.

      Update my portfolio for you:
      in my margin account: ADVDX produces 100% qualified dividend. AGD produces 74.6% qualified dividend. AOD produces 49.8% qualified dividends. Hte produces 100% qualified dividend, if hold for certain amount of time, please check yahoo HTE site for details or just HTE web site.

      I have been calling Alpinefunds and Alpinecef to make sure that I know the real facts.

    • Hello movealldirection; happy New Year of the Ox!

      My use of these two funds has been to purchase AGD in my taxable investment account, and AOD in my tax advantaged accounts (IRAs, 401ks). The Alpine website shows a bit of info on this, when you click the link "What's the differnce". Link is: (you might have to copy & paste).

      On the displayed page, they indicate that "Most or All" of the AGD dividends are expected to qualify as tax-managed dividend income. In the US, that means it qualifies for either 5% or 15% tax rates, depending upon your other reported gross income. The same web page indicates that they anticipate only 30%-50% of AOD income to qualify for the lower dividend tax rates, meaning that 70%-50% would be at your nominal tax rate; usually higher for most US taxpayers.

      Using steady state assumptions (no price or dividend change throughout the year), and today's figures, with current dividend payouts of $0.17 and $0.18, and prices of $7.82 and $7.06 (for AGD and AOD respectively), you get APYs (annual percentage yields) of 29.44% and 35.27%.

      [Formula for APY is (1 + div/shr$)^12 - 1 ]; use 4 instead of 12 for quarterly dividends, and 1 for simple annual dividends.

      Assuming the worst case scenario for AGD, a 15% tax hit against AGD's yield leaves 25% for net profits (0.85*29.44% = 25%). Compare that to the best case scenario for AOD: assuming 28% taxes on 50% of the AOD gains, and 50% of the gains taxed at 15%, that leaves a net profit on AOD of 27.69% ((1/2*0.85*35.27% + 1/2*0.72*35.27%) = 27.69%. If only 30% of the AOD yields end up qualifying for the 15% tax rate, then the net profit for AOD would be (3/10*0.85*35.27% + 7/10*0.72*35.27%) = 26.77%.

      So, AOD wins by roughly 2.5% to 1.7%, even in a taxable account. But that is using a very crude analysis, also assumes that the Alpine estimate prove correct, not to mention the big assumption that tax rules for dividends will hold constant. I personally have decided that chasing that small additional potential for gain isn't worth it in a taxable investment account. I'm also at the stage where I often cover my annual capital gains taxes out of my salary, without liquidating shares to pay for them. It's easier for me to do that if the annual tax burden is smaller.

      To repeat, I also have no idea at all what tax rules apply for foreign ownership. The math shows that the higher yield of AOD is almost completely negated by the higher taxes it generates. Your mileage may vary, and as a reminder, I'm just a man with a calculator, not an investment or tax adviser.

      Once again, 新年快乐 (I hope that's right; I'm stealing from other posters on this one!)

      • 1 Reply to danbrady
      • Thanks, let's start to celebrate Bull year for everyone.

        What a believable answer for a master!

        I listen and watch a Chinese Silicone Valley investment progremme:

        One guy from my home city Shanghai, his name is Warren Wang. He has been prove him being right 9 out of ten times.

        He predicted one of two days after Obama's inaugulation market will stop trending down and turn around.

        Year of OX started yesterday, earlier this year's organized investment workshop's title: Good sign will start to show after the beginning of the year of OX. they were right about 2006,2007 and 2008.

        I find HTE is very interesting 34%. Do you think HTE can give us more then AOD? I think less likely. am I right? and why?

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