Fiscal Cliff Not Resulting In Dividend Cliff

From The Blog of HORAN Capital Advisors
December 22, 2012 - 2:17pm

One of the most popular investment topics in the fourth quarter has to do with the impending fiscal cliff discussion taking place in Washington, DC as can be seen in the Google Trends graph below. One area of interest for investors is the impact on the taxation of dividends if Washington policy succumbs to going over the cliff. Going over the cliff would result in the tax rate on dividend income increasing to as high as 43.4% versus the current 15% rate. Interestingly, this potentially higher tax rate does not seem to be having a "negative" impact on the long term dividend policy for companies. Factset Research notes in their Dividend Quarterly report for Q3:aggregate dividends per share (“DPS”) grew 15.5% year-over-year at the end of Q3.the number of companies paying a dividend in the trailing twelve-month period again surpassed 400 (80% of the S&P 500 index).the S&P 500 als...

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