Does the tax impact here outweigh the potential values found abroad and the importance of diversification globally?
” Dickson: I would first call into question the premise that dividend-paying stocks are more immune to a market downturn. Total return on a stock is share-price gain or loss plus any dividend payment. If profits are paid out as a dividend, the dividend simply reduces the potential for price appreciation, but total return is roughly the same. The value of dividends is that they are often a signal from management regarding the company’s financial health: Maintaining or raising a dividend may reflect a positive outlook. Lately, a record number of companies have been cutting or eliminating dividends. That’s the flip side of that signal, possibly reflecting management’s pessimism about the companies’ prospects. As for the tax treatment of foreign dividends in a taxable account, the simple answer is you will end up in a pretty similar place investing globally versus in the United States with respect to taxes and dividends. Tax laws of various countries lead to a withholding tax on foreign di
