Author Topic: Dividends  (Read 3547 times)

going2ER

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Dividends
« on: January 26, 2016, 07:32:55 AM »
I've been trying to educate myself on dividends and am looking at investing in a local program. It shows an estimated dividend of 3%. By what I am reading this is on the low side of average?

But, I also want to reduce my taxes and this allows me a 35% non-refundable provincial income tax credit. If you designate your CEDIF as an RRSP you qualify for additional federal tax credits of approximately 30%, and Investments rolled-over (reinvested) after five years qualify for an additional 20% non-refundable provincial tax credit, if the CEDIF meets certain conditions. After ten years investments qualify for a further 10% non-refundable provincial tax credit, again, if the CEDIF meets certain conditions.

Does this sound like a good investment? Is it something you would buy? Do the tax credits make up for the lower dividend payouts?

Scandium

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Re: Dividends
« Reply #1 on: January 26, 2016, 08:54:44 AM »
I'd be more curious what this is invested in? Dividend yield and a dozen tax credits means nothing if it's a terrible investment in the first place. "A local program" doesn't really tell me much..

going2ER

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Re: Dividends
« Reply #2 on: January 26, 2016, 10:33:28 AM »
The money is invested in a number of different local companies such as Protocase, Media Spark, Advanced Glazings, Big Spruce Brewry, Halifax Biomedical and many more. It is an innovation fund.

Rightflyer

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Re: Dividends
« Reply #3 on: January 26, 2016, 12:34:38 PM »
Do your homework very carefully.

You are taking on the risk profile of a venture capitalist without the commensurate possible returns.

Also, there are many, many pitfalls: lack of liquidity, murky valuations, high management fees etc etc.

Bottom line is: Your ONLY return may be limited to a portion of the tax credits...the investments could quite possibly return cents on the dollar.

(Don't let the tax tail wag the investment dog...not in this case anyway)
 

 
« Last Edit: January 26, 2016, 12:36:35 PM by Rightflyer »

cloudsail

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Re: Dividends
« Reply #4 on: January 26, 2016, 05:08:12 PM »
10 years later I can guarantee you at least some of those local companies won't be around anymore....

Retire-Canada

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Re: Dividends
« Reply #5 on: January 28, 2016, 09:50:52 AM »
Does this sound like a good investment? Is it something you would buy? Do the tax credits make up for the lower dividend payouts?

No it doesn't sound good. I wouldn't do it.

presentvalue

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Re: Dividends
« Reply #6 on: January 28, 2016, 03:09:48 PM »
I agree sounds like too little reward for the risk. Plenty of other dividend picks out there right now that would be safer. Considering the drop in oil some of the major oil/gas companies are offering big dividends and assuming you don't think oil will go to zero their share prices should be fine over the next few years.

YoungInvestor

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Re: Dividends
« Reply #7 on: January 28, 2016, 03:39:59 PM »
10 years later I can guarantee you at least some of those local companies won't be around anymore....

The same argument could be made for vtsmx.

What are some metrics for your investment? Earnings, revenue, growth, etc.

The extra tax credit might make it worth it, but there certainly is additional work to be done. Whether potentially having 30% more tax credit makes it worth it is up to you.

SwordGuy

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Re: Dividends
« Reply #8 on: January 29, 2016, 10:37:39 PM »
10 years later I can guarantee you at least some of those local companies won't be around anymore....

The same argument could be made for vtsmx.

What are some metrics for your investment? Earnings, revenue, growth, etc.

The extra tax credit might make it worth it, but there certainly is additional work to be done. Whether potentially having 30% more tax credit makes it worth it is up to you.

A few bankrupt companies out of hundreds versus a few out of a dozen is a big, big difference.

whodidntante

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Re: Dividends
« Reply #9 on: January 29, 2016, 10:52:21 PM »
The money is invested in a number of different local companies such as Protocase, Media Spark, Advanced Glazings, Big Spruce Brewry, Halifax Biomedical and many more. It is an innovation fund.

I would pass.  Just my opinion. 

PARedbeard

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Re: Dividends
« Reply #10 on: January 30, 2016, 02:43:44 PM »
I'd pass too. There are plenty of solid companies out there right now paying a 3+% dividend. The tax credit is nice, but I'd rather put my money in a known entity.

PARedbeard

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Re: Dividends
« Reply #11 on: January 30, 2016, 02:44:15 PM »
...as much as anything is "known" in the stock market...