Perspectives Blog

Building wealth through dividend investing

February 18, 2014

We believe a disciplined dividend strategy that focuses on rising dividends produced by high-quality companies can help investors build wealth over time. Historically,  dividends have been an important component of total return, with the best opportunity for total return in the stocks of high-quality companies that can sustain and grow their dividend over time. Higher quality stocks act to mitigate risk and offer downside protection during time…

The role of asset location

Abram Claude, Vice President, Columbia Management Learning Center | October 23, 2013

…ent income — two of the components investors use under the new 3.8% tax regime to determine their exposure. Or consider the income from dividend-paying stocks, which often qualifies for qualified dividend treatment. Qualified dividends are taxed at the corresponding general long-term capital gains rate that would apply to the realization of long-term capital gains on the sale of the security. For investors over the 15% income tax bracket, but bel…

The new tax regime and stock compensation

Abram Claude, Vice President, Columbia Management Learning Center | October 30, 2013

…rket value upon the vesting date; $12 x 100 = $1,200 in compensation. Second, the recipient has ownership rights at the time of the grant, which includes receiving dividend payments even when those shares have not yet vested. Dividends received before vesting are treated as wage income and taxed as ordinary income. Note: The 60-day holding period required for qualified dividends does not begin until the vesting date unless the recipient made an 8…

Finding the sweet spots in corporate spending

Robert McConnaughey, Director of Global Research | February 24, 2014

Investors could find opportunity in capital expenditures. Strategic positioning in these areas is key to opportunity. Shale gas and automation are leading the charge in innovation. Cash balances at U.S. non-financials corporations have exploded in the post-crisis era, up 75% since the end of 2007. This is despite a rising return of cash to shareholders in the form of dividends and share repurchases. However, capital expenditures and reinvestme…

The world has gone global. Have you?

Paul Berlinguet, Vice President, Equity Products | May 21, 2013

…of 2.74% or higher. At the same time, the MSCI ACWI contained 841 (34% of the benchmark) stocks with yields at least that high. In addition, that index has just under 12% exposure to emerging markets where according to HSBC, dividends grew 8.3% from 2004-2011 compared to 4.8% in developed markets.* Of course, investors must balance sovereign risk with higher growth rates but emerging markets offer an opportunity to participate in the highest gro…

New taxes require strategies to maximize after-tax return

Abram Claude, Vice President, Columbia Management Learning Center | March 18, 2014

…the interest from taxable fixed-income securities such as corporate bonds at their marginal income tax rate. For high earners, this could be 33% or 35%. On the other hand, many investors pay tax on income from qualified stock dividends at a far lower 15% long-term capital gains tax rate. Even investors in the highest income tax bracket of 39.6% face a lower long-term capital gains rate of 20%. Given the significant differential in tax treatment,…

Quality milestone in the European recovery story

March 17, 2014

…trategy, December 2013 An increase in average net debt/EBITDA to 2x from the current 1.6x would provide €400 billion of firepower for growth. As with U.S. corporates, the short-term focus is likely to be on share buybacks and dividends rather than increasing capex. But in a low-inflation/low-interest-rate world, pressure for increased capex and M&A is building. The main risk is that turmoil among emerging markets undermines business confidenc…