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General Electric Company Message Board

uhlerf 4 posts  |  Last Activity: Apr 17, 2015 6:50 PM Member since: Jul 23, 2010
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  • Reply to

    I'm no longer lost, Re: 12% dividend

    by lamontcranston17 Apr 16, 2015 6:43 PM
    uhlerf uhlerf Apr 17, 2015 6:50 PM Flag

    : "Lied to" may be a pretty strong expression, but... when terms are tossed around without differentiating or maybe just without understanding their exact definition, I spose we could just chalk up our money losses to "learning experience"..... Words like "distribution" and "dividend" are often used interchangeably, but a dividend is only one form of distribution, and "capital gain" is not a "dividend" either..... These are just a couple examples. (seems like "profit" falls in there somewhere, too).....
    So. Hoosier, maybe you could explain how Yahoo Finance Summary page refers to every stock's "div/yield" when part (or all) of that distribution is not "dividend" at all, but actually "return of capital" (yer own money), especially when that company itself can't determine a given distribution will be treated til AFTER year end.....
    Just when in "investing 101" was that covered?? Did I not pay close enough attention?
    In attempting my DD I'm still waiting for an explanation of "how is 'return of capital' an advantage over straight 'dividend-' or 'capital gain-' investing." Still waiting..... Waiting.....
    (If there really is an "investing 101" maybe someone could point me in that direction).....

  • Reply to

    12%? not really.....

    by uhlerf Apr 14, 2015 10:27 PM
    uhlerf uhlerf Apr 15, 2015 1:46 AM Flag

    oops, my bad (for some readers here) - too many variations in tax treatment, as well as distribution payment for CIM/2014..... My experience in the past has been for ROC to be applied as a single percentage across all qtrly payments, but CIM chose to call the payment on 1/31/14 all ROC (20 cents/share), plus, a small part of the 4/24/14 payment.
    So, since I held 1000 shrs for that first payment, and then 500 thereafter, and since CIM made its 5th (& final) payment for 2014 in January 2015, (total 5 distributions), and cap gain was designated only 3 or the 5 distributions, the arithmetic varies for each investor, and is easy for each of us, but too complicated for here..... Suffice to say the 54% ROC is correct for my situation but probably no one else.
    Still, wish I could figure how ROC is a significantly advantageous investing strategy.
    Anybody???

    Sentiment: Hold

  • Reply to

    12%? not really.....

    by uhlerf Apr 14, 2015 10:27 PM
    uhlerf uhlerf Apr 14, 2015 11:37 PM Flag

    1099 (from broker) & my own record show $380 total. of which $205.92 was ROC. I have found several explanations of ROC is and how it works, but have yet to find any reference as to it being advantageous investing-wise.
    Monthly statements show my cost basis being lowered also. it shows "original" price/share paid, and "adjusted" cost basis.
    My experience has been that the company may not know how distribution is to be treated til after end of year (I have contacted a couple companies about it), and this is part of why some of us receive "amended" 1099 (usually March).
    Only advantage I can think of is lower tax rate on cap gain than tax on div. Still unsure if that's a significant advantage, or if there's something else I haven't figured out.....
    Answer to yer question is 1099 and monthly statements.
    ps, had just 500 shrs (before R/S) (now have 100) (no change in value or cost basis due to R/S)

    Sentiment: Hold

  • I guess everyone here is aware that the "dividend" includes "return of capital" (your own money)?? Last year(2014) ROC was over 54% of the distribution, which means that your cost basis was lowered by 54% of whatever dollar amount you got as "dividends". Now, IF you sell you will make (and be taxed) that much more than you thought (If you thought CIM paid 12% yield). So, I contend that any stock that seemingly pays a "high" dividend really doesn't (when part of their yield is ROC),,,,, I've been trying for several years to find what the investing advantage is in this situation..... If anyone knows, please educate me.
    Granted, the amount that is "ROC" is not currently taxed - that part I know, but if the stock is sold and cost basis is lower than originally paid, then the capital gain (on which we're taxed) increases beyond what it would have been had ROC not occurred. Again, if anyone knows how ROC creates an investing advantage I'm happy to learn.....

    Sentiment: Hold

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