Quote:
Originally Posted by red-beard
I was thinking last night that maybe now is time to shuffle the portfolio. Think about it. Capital Gains tax is low AND the gains will be small, or maybe offset with some losses. This would mean that re-shuffling right now your taxable stocks would be cheap. And you can move into somethings that are going to do better, or as I'm thinking, that pay dividends. The Dividend yields are very high right now, based on the stock prices.
Thoughts?
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If the economy tanks, the companies won't be able to keep paying the dividends they are paying now.
This is what the market is expecting -- you saw similar "excellent" dividend yields in the financials last year and earlier this year. If you bought the financial stocks though, you'd be pretty much wiped out now.
There is no "free lunch" in investing. High yields means there is high risk. (There can also be high risk with low yields, so don't assume that because the yield is low, it's "safe.")
Additionally, if we get Obama as President, expect the tax rate on dividends to skyrocket.