Economic Cycles

Economic Cycles

Economic cycles influence the performance of different sectors.

Defensive sectors, such as utilities and consumer www.bigcityrollers.com staples, tend to perform better 관련주 during economic downturns, while cyclical sectors, like technology and industrials, may excel during economic expansions.

  1. Example: During a recession, an investor might increase exposure to defensive dividend stocks to ensure a stable income stream.

Inflation

Inflation can erode the purchasing power of dividend income. Companies that can consistently increase their dividends above the inflation rate help protect investors from inflationary pressures.

  1. Example: A company like Procter & Gamble, which has a history of increasing dividends annually, can help investors maintain their purchasing power.

Tax Implications

Understanding the tax implications of dividend income is crucial for maximizing after-tax returns.

Tax Rates on Dividends

Dividend income is subject to taxation, with different rates applied to qualified and non-qualified dividends. Qualified dividends are taxed at the lower long-term capital gains rates, while non-qualified dividends are taxed at ordinary income rates.

  1. Example: An investor in the 24% tax bracket might pay 15% on qualified dividends but up to 24% on non-qualified dividends.