How to Make the Most of Ordinary Dividends


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5 Ways Your Wealth Is Under Attack Book John Smallwood


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The 19 Sources of Retirement Income: Ordinary Dividends

Welcome to the Wealth under Pressure Podcast, in which John Smallwood, a certified financial planner, identifies key areas of pressure on your wealth and strategizes with you to reduce it.

In this episode, John continues his series The 19 Sources of Retirement Income. He explains ordinary dividends, and the benefit of owning them as an individual, in addition to whatever stocks are part of your IRA or 401K.

John is the author of 5 Ways Your Wealth is Under Attack. He has lectured extensively on financial planning and has received the Five StarSM Wealth Manager Award 6 years in a row.

John’s strength lies in his ability and commitment to continually improve the level and quality of the financial planning process. His dedication to his clients’ growth involves an evolving strategy that strives to meet the demands, desires, and needs of his clients in a continually changing economic environment.

Don’t miss John’s key points:

  • Dividends come from owning stock in a company.
  • Dividends are paid to shareholders in regular intervals.
  • A strong dividend yield provides the income stream that you want as one of your sources of retirement income—apart from your investment accounts.
  • It’s important that your dividend yield comes from both qualified dividends and ordinary dividends—which refers to the way they are taxed: Ordinary dividends are taxed as ordinary income.
  • Ordinary dividends are taxed at 10% for the lowest bracket, up to 37%. (Contrast that with the highest tax rate for qualified dividends, which is 20%.)
  • All dividends are ordinary unless they are specifically designated “qualified.” Examples of ordinary dividends are:
    • Real Estate Investment Trusts (REITs), which are traded publicly
    • Master Limited Partnerships (MLPs)
    • Hedge funds
    • Employee stock options
  • Having both qualified and ordinary dividends from many different types of companies in different industries and in different countries gives you a resilient income stream. That income stream will be also be much more tax-efficient than if your dividend income is all from one source or is of one type.

At Smallwood Wealth, we want you to accumulate as many of the 19 Sources of Retirement Income as you can. Investing in stocks as an individual gives you a separate stream of income from your retirement accounts and protects your plan from unforeseen events.

For more, listen here. Then visit us at smallwoodassociates.com and click the “let’s get started” button, connect with us on social media, or call us at (800) 797-1000. Set up a free, no-obligation phone call. Let’s diversify your income streams for retirement.

Talk to a Smallwood Wealth Management Financial Advisor

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