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American Capital Agency Corp. Message Board

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  • yourbestfriendintheworld yourbestfriendintheworld Nov 9, 2012 11:58 AM Flag

    Possibility of tax hikes on dividend stocks.

    The Strong Buy is correct, but for the wrong reason. AGNC divs are already taxed at ordinary rates, as are all mREITs. It's the taxes on qualified divs that will go up. Possibly to ordinary rates. If that happens, there's no longer any reason to choose other stocks over mREITs, and more money comes to mREITs.

    6% div taxed at 15% leaves 5.1%
    15% div taxed at 28% leaves 10.8%
    The mREITs have a 111% advantage.

    6% div taxed at 28% leaves 4.3%
    15% div taxed at 28% leaves 10.8%
    The mREITs have a 151% advantage.

    Such a change will just make mREITs significantly more attractive.

    So yes, Strong Buy.

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