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American Capital Agency Corp. Message Board

  • chenf02 chenf02 Mar 12, 2013 12:28 PM Flag

    Dividend is actually not free money

    It is obviously part of your share price. You also need to to pay income tax AGAIN for this dividend that is actually a part of the after-tax money you put in purchasing this stock. It is especially bad if you lose money for selling AGNC after dividend is paid. People here may not realize these facts that are not for non-div paid stocks. Div-paid stocks are for long term holding, but the fatal factor to affect the stock growing is div cut, that AGNC is facing now. Please correct me if I am wrong.

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    • There is no double taxation on the AGNC divy. The dividend that AGNC pays is non-qualified, which means it is taxed as ordinary income. This has to do with the fact that AGNC is chartered as a REIT. They must pay out at least 90% of their earnings in the dividend. In exchange AGNC is exempt from corporate taxation. For this reason AGNC is best owned in an IRA.

    • WRONG

    • it is not part of the share price, like a bond. come next week, there will be no dividend at all that anybody can point to. if you sell 1 day too early, you are not entitled to the dividend at all.

      AND, depending on what your plans are for the shares, the dividend ranges from free money to an incredibly expensive proposition. consider the greater suckers, who are even now bidding the price up. they face an uncertain future. some of them are buying the dividend in the face of an equivalent uncertain capital loss in a few days, while others are trying to participate in the uncertain run.

      some others, who bought 3 years ago and have held the whole time, can view it as free money forever, as their original investment is probably paid back already.

    • yourbestfriendintheworld yourbestfriendintheworld Mar 12, 2013 1:08 PM Flag

      You are wrong.

      I did no work for this dividend. It's free money.

      • 3 Replies to yourbestfriendintheworld
      • There are opportunity cost and the fact that the government expands the money supply requiring that you make at least that much plus taxes just so you don't go negative even if you spend none of your savings. And then there is the time you must spend to find an investment that satisfies the level of risk you are willing to expose yourself to. That is called mental labor. And then there are the losses you incur if you are wrong which represents money deducted from past work. In other words, past work that you are no longer compensated for because you lost the money you made for it. Unless you were born into wealth and received an ample inheritance, which is rare, just about anything you invest represents the results of work you performed in at some time in the past somehow or another. And it is money you have already paid taxes on. It is not like anyone makes money from nothing unless they are abnormally lucky and that is not the case for the majority of people. In fact if you are the average investor your average gain for the last decade was zero for all the effort you spent on it. I would hardly say that this is for free. Never mind the few rich people that make headlines because they happened to get lucky. That is not the norm. So who cares? In the last 10 years about one half of investors lost money and they spent a lot of time doing due diligence even if it did not pan out. And if you account for inflation most people are 30% in the hole, even the 1%.

      • YBFITW a Dividend is not free when Capital is at risk. Find a twenty on the street,that's free money but is taxable income. Hate to leave but i checked out at $32.99 for a fast 4.5% low risk Dividend. The 25 cents left on the table is a sacrificial offering to the MM. See you on the next SPO.

      • No is you who are wrong. See that gambler mentality. investors earn the div. By putting their money into the actual shares. Div. Investors don't have the high ca
        of other stocks. They take the div. As return on inv. Which is reward or payback for inv. It is not free. In fact congress not only can they trade on insider knowledge, they keep us paying tax on the div. Most countries do not tax div. But hey....that's the rules.

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