Universal policies became attractive because they offered a higher rate of return (the dividend) on the savings component than one could get from old-fashioned whole life.
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Had they remained single, neither Howard nor Beth would have each pay tax on their ordinary income at a maximum rate of 33%, and all of their dividend income would be taxed at 15%.
The company has paid a dividend for over five years, with a dividend growth rate of 8.3% over that time.
Dividends fell out of favor in the 1990s when the dividend tax rate was roughly twice the rate of capital gains.
Think of this cap rate as the dividend yield on your investment, comparable to the dividend you get on a real estate investment trust.
Shares of the aging discounter are essentially unchanged from where they were five years ago, meaning that an investor who bought the stock in July 2002 has made an approximate 1% return, the rate of Wal-Mart's dividend yield.
One area with greater potential to impact portfolios is the fate of the qualified dividend tax rate, scheduled to increase from 15% to ordinary income.
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Of course, all this assumes that the low dividend and capital gains rate, now set to expire at the end of 2008, is made permanent and that the highest tax rate of 35% for ordinary income doesn't rise.
Such income is taxed once at the corporate rate of 35% and again when it is passed through to the individual as a capital gain or dividend at 15%, for a highest marginal tax rate of about 44.75%.
Blackstone has an expected long-term earnings growth rate of 19.6% and pays a dividend that yields 2.5% annually.
The current dividend rate affirms an annual yield of 2.9%.
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With a long-term expected earnings growth rate of 14%, reasonable valuation and a strong dividend yield, Evercore Partners is a promising pick for investors seeking both growth and income.
To sweeten the deal for investors, the company has increased its dividend six times at a compound annual rate of 14%.
Capital appreciation came in at 23.6% per annum, and when you add in the rapidly growing dividend, shareholders enjoyed a total annualized rate of return of 24.8% per annum.
Another potential complication is how the growing burden of financing the dividend could impact the dividend growth rate going forward.
Many, but not all, preferred shares produce qualified dividend income that is taxed at a preferential rate of up to 20% versus the ordinary-income rate of as much as 39.6%.
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In the absence of Congressional action, the current rate will expire, and the dividend rate will revert to ordinary income tax rates.
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And don't forget that the ObamaCare investment income tax surcharge of 3.8% also begins in 2013, so stock owners are going to be happy to hear that the new dividend tax rate could be 48% in the name of tax fairness.
In April, Exxon hiked its dividend 21%, more than twice its annualized growth rate of 9% over the last five years.
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With its dividend return and an expected long-term FFO growth rate of around 7.2%, Taubman Centers appears to be a promising pick for investors seeking both growth and income.
With its dividend return and an expected long-term FFO growth rate of around 8.1%, Digital Realty appears to be a promising pick for investors seeking both growth and income.
With a decent dividend yield and an expected long-term earnings growth rate of 9.2%, American Campus Communities looks like a promising pick for investors seeking both growth and income.
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The dividend payout ratio was 30.6% in 2011, above the rate of 20.8% in 2009 and 24.2% in 2010.
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Occidental Petroleum, the fourth largest U.S. oil company, is another top performer, posting an impressive earnings growth rate of 45.8% and ROE of 14.7% and pays a decent dividend that yields 2%.
Dividend income would be taxed as ordinary income, subject to the maximum rate of 39.6%, up from the current maximum rate of 15% for qualified dividends (plus the Obamacare surtax as referenced below).
With this strong upside potential from both product and geographic expansion, combined with its solid dividend rate, I predict that this is one investment not likely to go out of style next season.
The dividend rate chopped to the same 15% as for capital gains by the Bush tax cuts of 2003.
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Taubman Centers has been paying dividends regularly and hiked its quarterly dividend rate by nearly 3% to 46.25 cents per share in the first quarter of 2012.
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