Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Hi,
Thank you all for the detailed answers.
The reason I have to pay 25% tax on each dividend is that I'm an ex-U.S investor.
Unfortunately, I find it hard to impossible to evaluate II recommendations in light of that tax obligation of me. In addition, I find it hard to compare II recs to IV recs both in terms of estimated upside and in terms of risk grading.
This makes it hard for me to decide, for example, whether to invest new money in a hypothetical II or IV rec (assuming both are appropriate to my portfolio in terms of diversification/asset allocation and risk profile).
On one hand, I've heard that II recs & valuation estimates tend to be on the conservative side compared to those of IV (is that because of assuming slower growth for the same businesses? Sometimes it seems like the valuation estimate of II is more like the "buy below" price of the same IV rec). On the other hand, I couldn't find any official guideline for such comparisons or considerations.
I do value the diversification benefit of having recommendations from more than one service, but since my primary goal is capital gain and not current income, I find it hard to appreciate whether II recs are appropriate to new money in terms of pure estimated capital gain (assuming dividend reinvestment after a 25% tax deduction of each dividend).
If you have some useful rule of thumb, methodology or math formula that incorporates that 25% tax, and/or suggested method of thought about how to select those II recs that will be an optimal addition in favor of a non-dividend-paying rec, I will be grateful if you share it.
Or should I just compare estimated upside (valuation divided by current rate) for both services?
Kind Regards
OTV
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.