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ABBV
Mar 30, 2022 15:48:39 GMT
Post by Deleted on Mar 30, 2022 15:48:39 GMT
This has had quite the run up. From many analyses I have read, it looks substantially overvalued. Morning* has it at 1 star. Any holders thinking of selling? I am.
Looking at the loss of HUMIRA next year. See some promising drugs, but again - this is quite a run up!
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ABBV
Mar 30, 2022 16:58:50 GMT
Post by win1177 on Mar 30, 2022 16:58:50 GMT
This has had quite the run up. From many analyses I have read, it looks substantially overvalued. Morning* has it at 1 star. Any holders thinking of selling? I am. Looking at the loss of HUMIRA next year. See some promising drugs, but again - this is quite a run up! I’m going to hold mine, although I definitely would NOT buy more here. Am a little worried about Humira patent cliff, but that’s been an issue for years. My cost basis is real low, don’t need to sell for anything, and it’s only about 2% of the portfolio. Many of my stocks have really shot back up, but just sitting pat for now. Still have about 11% cash. Win
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ABBV
Mar 30, 2022 16:59:27 GMT
Post by uncleharley on Mar 30, 2022 16:59:27 GMT
The short and intermediate term charts indicate that ABBV is currently overbought. At least one indicator shows that it has been overbought for most of the last 5 yrs. I would hold it until it begins a serious correction (something that is verifiable). Some people like to take profits, I like to let them run until they stop.
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Deleted
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ABBV
Mar 30, 2022 17:42:11 GMT
Post by Deleted on Mar 30, 2022 17:42:11 GMT
I get both sides, so split the difference - sold in ROTH, kept in taxable. I am trying to let intrinsic valuation be my guide on buying and selling. Discounted cash flows, required return, discount rate. That can vary quite a bit depending on estimates/selections of these variables. I saw enough calculations that I believe it is overvalued. Can it still go up? Of course. This is my only 1 star rated stock (Morning*). There isn't a perfect answer, but I made a good amount of profit.
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ABBV
Mar 30, 2022 18:37:30 GMT
Post by kathiel on Mar 30, 2022 18:37:30 GMT
@slooow, win1177, uncleharley, ABBV has had a good run up. I think it has a way to go yet, what a pipeline!! I sold a little.
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ABBV
Mar 30, 2022 19:43:15 GMT
Post by gman57 on Mar 30, 2022 19:43:15 GMT
Up ~53% in the last year...not too shabby.
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ABBV
Mar 30, 2022 20:45:34 GMT
Post by bizman on Mar 30, 2022 20:45:34 GMT
@slooow , win1177 , uncleharley , ABBV has had a good run up. I think it has a way to go yet, what a pipeline!! I sold a little. Big thanks to kathiel for the heads up on ABBV several years ago. This has been a great stock. I sold 1/6 of my big position at the start of February. I may trim the remainder in a similar manner semi-soon. The big cliff with the Humira LOE is well-anticipated. Rinvoq and Skyrizi look like great successor's financially and therapeutically, at least as far as I can tell. In addition, the Allergan acquisition seems to have gone well. If I had a tremendous opportunity I was aware of I might move some more of the remainder, but I don't. They will take a big hit to earnings and cash flow next year. But it seems like the remainder of the company should start to grow again fairly shortly (my guess within a year or 2). It won't be seamless, but the dividend should be secure. A survey of PE's shows M* at 25.14 trailing (and 12.65 Price to Cash flow) and 11.48 Forward PE. Value Line has ABBV trading at 12.6 times trailing, and 11.7 times forward PE, with a 40% Payout Ratio for 2022, and 47% for 2023. While I don't know the future any better than anyone else, and will certainly defer to kathiel on that score, until some much better alternative shows up on my radar screen or ABBV stops executing or runs into substantial bad news or something, I am willing to ride with a decent sized position given the seemingly well secured dividend while they go through some indigestion over the next few years.
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Deleted
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ABBV
Mar 30, 2022 21:26:10 GMT
Post by Deleted on Mar 30, 2022 21:26:10 GMT
I'm not sure if I calculated correctly, but I think my cap gain profits total 15 years of dividends at the current dividend rate. Humira is the best selling (profit wise) drug of all time I think. I don't think they have a replacement. Maybe some promising additions. So - some uncertainty as per some valuations based on discounted future cash flows. There isn't a right answer and I do find it hard to sell. Replacements - I will wait for another undervalued dividend paying stock.
I like using trailing p/e over forward too.
I have thanked Kathie several times for this steer. Thank you again!
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Deleted
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ABBV
Mar 30, 2022 23:22:27 GMT
Post by Deleted on Mar 30, 2022 23:22:27 GMT
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bf22
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ABBV
Mar 30, 2022 23:56:04 GMT
Post by bf22 on Mar 30, 2022 23:56:04 GMT
I continue to hold...
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ABBV
Mar 31, 2022 1:13:48 GMT
Post by bizman on Mar 31, 2022 1:13:48 GMT
Here's a thought. Since all investment decisions are relative ones, maybe it would be useful to say not just whether we would sell ABBV or not, but what we would do with the proceeds. After all, like in an election, you can't beat something with nothing. You need to put the money somewhere.
Sell it and go to cash? I've already got tons of cash so I'm not eager to do that, barring it looking like a disaster going forward.
As far as other potential alternatives, what would people think of? Unilever (UL) has taken a hit and yields over 4%, but seems not to be that high quality to me anymore. Plus lots of weakness in Europe, and tending to struggle in EM with their brands against growing local brands, at least it seems to me. But they do have an activist presence after their questionable management broached and then abandoned a move into I believe the slow growth GSK/Pfizer consumer product JV that seemed to indicate they aren't particularly happy or optimistic about their core business and its growth going forward. I have found that when I go down in quality I have a tendency to fall into value traps. Others have differing opinions here?
Any other ideas of potential replacements and plusses and minuses thereof?
********************************
Edited to add: I'll throw out a few other names and thoughts.
I don't own Alphabet (GOOGL). They seem not to have been affected by the Apple/privacy change that clotheslined FB. It's a high quality company. Not a bad price versus its growth rate. Is this the time to buy growth? What percentage of a portfolio is too much in tech as I own a big chunk of MSFT? I don't know this company as well as I'd like. Any particular plus or minus issues to consider?
Maybe I should reconsider my recent sale of Philip Morris (PM) based on the Russia/Ukraine war. I could still buy it back 7% or so cheaper than I where I sold it. The Russia losses and suspension in Ukraine plus their already existing issues with shortages of semiconductors holding back the growth of their iQos heat not burn device are definite headwinds. Should I hold my nose and buy and try to just look through the short term?
What about Merck (MRK)? I don't know this one very well, but I know Keytruda is big for them. 3.3% yield. New CEO just replaced longtime CEO Ken Frazier. Other than that I'm kind of in the dark as to whether this would be worth my time to really dig in and get to know the company.
Any others? Funds or ETFs that look particularly attractive?
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Deleted
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ABBV
Mar 31, 2022 8:21:04 GMT
Post by Deleted on Mar 31, 2022 8:21:04 GMT
Biz - those are good ideas. I am also interested in why dividend investors decide to sell or don't. Don't have Josh here to say sell!
Why I sold ABBV - valuation. I have struggled with selling positions with my thought I am a buy and hold investor. I have been burned by not selling when I should. For me there is that little voice in my head - "but it might go higher." That is not a smart voice. That is my gambler's voice. So I decided to make myself take profits on positions that have doubled, don't have monopoly like power or don't have a strong growing economic moat, and are intrinsically overvalued. In my view, ABBV's price doesn't reflect the company's value. It is losing its big gun. And it is a very big gun - 36% of last year's revenues. I feel I could have waited another quarter as sales are expected to be strong. But another opportunity might present or ABBV's price could fall and there won't be value to fall back on. I have 1/2 left because I don't have 100% confidence in the over valuation - although I suspect it is from valuations I have looked at, particularly with Buffett selling a large part of his stake and some pretty hefty insider sales.
I am currently looking at LEG, LEN, AMGN, SHEL CTRA, EPD. LMT, VZ, O as potential areas of value. I am a little nervous of both UL and MMM. My other one I bought a little higher than I normally should is APD. All have a ways to go to be a problem, particularly APD. I could get out of APD with a small profit. Not sure. It acts like an oligopoly - dividend artistocrat - growing.
I like your SCHD - and if we get a decent pullback might try and start transitioning my sells to it.
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Post by kathiel on Mar 31, 2022 18:02:33 GMT
MRK is a good company, and they do have Keytruda, which I swear gets approved for a new cancer indication somewhere in the world almost weekly. Another Pharma to consider is PFE, not only for their covid vaccine, but also for their covid treatment drug. Or you might consider OGN, which was a spin-off from Merck within the last 6 months or so. All of these have dividends of 3% or slightly more. All have potential to generate nice cap gains. I do like pharmas for the combination of dividends and cap gains they offer.
Look at SCHD for possible buys, but remember when you buy a fund or an ETF you incur expenses (even if low) that you don't when you buy individual stocks.
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ABBV
Mar 31, 2022 18:26:49 GMT
Post by bizman on Mar 31, 2022 18:26:49 GMT
Hi Sara,
I think this is an interesting and useful discussion, because it more represents the thought process of a real person. I'm struggling with this one too as I'd love to have a clear no brainer alternative that was screaming "buy me."
You make a lot of really good points. At the same time, I've learned that M* analysts with their DCF valuations that are highly dependent on a bunch of assumptions they make are not gods. It's a bit like looking at the universe through the Hubble Telescope, if you are off by an inch, you could be in another galaxy. And as Buffett and Munger have pointed out, cost of capital doesn't appear in nature, it is kind of a convoluted series of assumptions you can make be whatever you want to get the result that you want.
Also, single industry analysts tend to be relative rankers of only their individual corner of the world. I mean, is ABBV at 11 times forward PE really 44% overvalued, whereas PEP and KO with mid-20's forward PEs are really only 5-10% overvalued? Seems like apples and oranges to me, at least to some extent.
Plus there are a lot of cases where M* has been constantly pounding the table on supposedly cheap stuff like Hanesbrands (HBI) and Compass Minerals (CMP) that seem pretty obviously low quality businesses to me that have been dogs for years. Such guidance and personal experience have shown me that business quality and momentum in terms of business performance and management quality, while much more qualitative than quantitative, are much more likely to be indicators of future success, at least all else equal, than simply the quantitative stuff.
So where does that leave us? In an uncertain world, with partial information, trying to get an edge and making at least good enough judgments. And ABBV itself will depend on whether it outperforms or underperforms its expectations of Humira performance after the LOE (revenues are not expected to go anywhere near zero) and the potential upside to analyst expectations of Rinvoq and Skyrizi, and the rest of their business. Analysts have been very wrong for the last several years on the low side on all of the above, which has allowed the big outperformance we have seen. Perhaps their estimates (versus management guidance and its record of underpromising and overdelivering) will be more accurate going forward, and giving ABBV the benefit of the doubt is wrong. Now I don't want to be a pig, and I have trimmed my position in the last year or so, and probably will again. So it's not necessarily all or nothing. But who knows.
I have been reluctant to really try to tear into Alphabet, since it seems outside of my wheelhouse and circle of competence. Maybe I'll try to really get to know it. And then, maybe I'll think about increasing my allocation to SCHD, or maybe branching out into VYM, which has a bit more exposure to energy and materials, and seems a bit more cyclical. Although my suspicion is that I'm already heavy enough in cyclicals, and I feel the need to have some ballast in my portfolio construction to smooth the ride a bit on risk off days.
Unless there are several great ideas that I am too blind to see, it really does seem like a conundrum to me. Good luck to us all!
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ABBV
Mar 31, 2022 18:31:18 GMT
Post by bizman on Mar 31, 2022 18:31:18 GMT
MRK is a good company, and they do have Keytruda, which I swear gets approved for a new cancer indication somewhere in the world almost weekly. Another Pharma to consider is PFE, not only for their covid vaccine, but also for their covid treatment drug. Or you might consider OGN, which was a spin-off from Merck within the last 6 months or so. All of these have dividends of 3% or slightly more. All have potential to generate nice cap gains. I do like pharmas for the combination of dividends and cap gains they offer. Look at SCHD for possible buys, but remember when you buy a fund or an ETF you incur expenses (even if low) that you don't when you buy individual stocks. Thanks for your input kathiel. I'm already full up in PFE, so I agree with you there. I'll have to try to dig into MRK to get to know it better. Sure appreciate your input and guidance on ABBV and others. Post often if you feel like it. I'm a bit scared of OGN as VTRS, which I got in the spin from PFE, has been a real dog. But maybe it's worth a look. Thanks again for everything!
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Deleted
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ABBV
Mar 31, 2022 20:31:53 GMT
Post by Deleted on Mar 31, 2022 20:31:53 GMT
Biz - agree. No perfect answers. Agree about M*. I don't take them at face value. Like you, I follow VL and I do a heck of a lot of online research. I will never be accomplished at my own valuations, but can somewhat valuate process. Today I added a bit to LEG and LEN at the close. I am trying to beef up mid-cap a bit. LEG is a steady eddie aristocrat at a fair price. LEN is downright cheap. Future of housing has it depressed.
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ABBV
Apr 1, 2022 0:19:13 GMT
Post by bizman on Apr 1, 2022 0:19:13 GMT
Here's another layer of complexity for my situation. A large part of my portfolio is in taxable accounts, and I have already taken a good chunk of capital gains for the 2022 tax year.
Having done a fairly elaborate, yet quick and dirty tax analysis, I figure selling my whole ABBV position would cost me 11.7% of my position in taxes. Now, of course, a gain is a gain, and maybe I should just feel happy to pay the tax and support the national fisc.
Then again, if I look at it as I could lose 12% of my value and be even versus selling it, maybe it changes the picture a bit? How much risk do we really think there is to ABBV from the Humira LOE? Now, I know any stock at any time can be down 30%-40% if we have a big bear market. But I'm wondering if we can make a guess on the likely steady state valuation the market may feel ABBV deserves in 18 months if Humira and other revenues follow analyst estimates?
Do we think ABBV is worth 1/3 less? 20% less? This might change the analysis a bit.
Of course, if I have a no brainer alternative this is an easy decision to make.
Just noodling.
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ABBV
Apr 1, 2022 0:34:51 GMT
Post by kathiel on Apr 1, 2022 0:34:51 GMT
bizman, Why plan for all or nothing? When I'm selling a stock I like (think is a good company and will continue to grow) I sell a portion of it rather than the whole position. Take a look and see if that changes your calculation.
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ABBV
Apr 1, 2022 0:40:00 GMT
Post by bizman on Apr 1, 2022 0:40:00 GMT
kathiel, Good point. The market tends to show me how dumb I am when I go all or nothing. Incremental moves makes sense. Thanks!
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Deleted
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ABBV
Apr 1, 2022 1:19:09 GMT
Post by Deleted on Apr 1, 2022 1:19:09 GMT
I sold half of my position because I don't know what will happen. I think it, like most of the market, is likely overvalued given interest rates are heading up - never mind other considerations. It might get bid up as a dividend stock. Might correct. No one knows. So a partial sale made sense. And it was hard. I hate selling. I have been forcing myself to pare and take gains. I like the rule of selling 25% on a 100% run up - overvalued or not. This rule just makes me think about it, and do something. Capital gains - I had them last year and will this year. I just try and plan. ABBV - maybe wait for the first quarter without a monopoly on Humira - see the impact to the bottom line - tune out the earnings reaction - and evaluate from there as to valuation.
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ABBV
Apr 1, 2022 2:03:35 GMT
Post by jongaltiii on Apr 1, 2022 2:03:35 GMT
@slooow This stock was just discussed by a panel on CNBC this week. The recommendation was to do exactly what you did due to the run up. Take some profits from a portion of your holding and keep the rest. They think it will pull back in the short term but gain in the long term. Humira was not mentioned. Apologize for the lack of specificity but thought it was worth sharing anyway.
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ABBV
Apr 1, 2022 22:20:29 GMT
Post by kathiel on Apr 1, 2022 22:20:29 GMT
@slooow, you mention that VZ is one of the stocks you are looking at. I own a goodly about of VZ and have been content with it. I do like telecoms - good, growing dividends. I also hold BCE, a Canadian telecom. If you hold a Canadian stock in an IRA, they will not withhold taxes. In a taxable account, they withhold 15% for taxes.
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ABBV
Apr 2, 2022 3:44:21 GMT
Post by bizman on Apr 2, 2022 3:44:21 GMT
Just to acknowledge that not all takes on ABBV are bearish, I thought I'd share that Ben Levisohn in the Trader column in Barron's lists stocks that could benefit from both recession or expansion. In addition to a handful of other stocks, he lists ABBV and AMGN in healthcare. Not that he is an investment god, but apparently an 11 forward PE doesn't yet have everyone convinced it is certain to drop like a rock next year. AbbVie, Exelon, and More Stocks for the Recession That May—or May Not—Be Comingwww.barrons.com/articles/stocks-recession-51648854568?mod=hp_LATEST
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Deleted
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ABBV
Apr 2, 2022 11:43:55 GMT
Post by Deleted on Apr 2, 2022 11:43:55 GMT
Kathie - I am a fellow holder of VZ - probably from Josh days. It's 2% of my portfolio. I am looking to add between 46-48. I did not know about not withholding foreign Canadian tax in an IRA. I thought you just had to accept that and at least in a taxable you could get some sort of refund. Always something to learn - thanks!
Biz - I don't think of ABBV in bearish terms - just that maybe it got a little too much ahead in price. It's a great company and has a good dividend. I am not regretting my sales which helps me out the next time - as mentioned - I am a reluctant seller.
As far as buying - I have added to my two holdings I feel are currently undervalued - LEG and LEN. Won't be adding more.
Looking for commodity-related pullbacks if the market freaks at a .50 fed fund rates increase. I think capex is going to be going on a long time as we are so behind now.
I like utilities - 5% of portfolio - but too pricey. Wouldn't mind getting back into SO if there is a chance. Have AEP and DUK. UTG has taken off - I did not buy.
VNQ - haven't been able to touch it - too high. Like real estate and took a position in VNQI and already have FRIFX.
Financials, Industrials, Health - market weight. Over on Staples. Well below on Tech - and mostly AAPL. For Health - I would add to AMGN, PFE if I get the chance.
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comlb
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ABBV
Apr 2, 2022 16:04:11 GMT
Post by comlb on Apr 2, 2022 16:04:11 GMT
Certainly like the utilities space, especially with the renewable investment opportunity that many have. This was a bracing perspective about utilities and inflation. Headwinds from increased material costs, regulatory challenges, and more. There are some good tips on how to pick 'em in there as well (constructive regulatory relationships) : www.morningstar.com/articles/1086186/dividend-stock-deep-dive-utilitiesOne of the great things about Josh is that he really stuck to his knitting. I did learn a lot when he explored new territories. For tech, one that he did not pull the trigger on, but did write favorably about was Texas Instruments. Not a high yielder, but current 2.5% is 3x more yield than Apple and an excellent ten year track record. The other one that he did pull the trigger on was Lamar billboards. I remember being impressed at the time after all he only looked at Narrow and Wide moats, for him to buy a stock that was not even covered by M*. It has had a pleasant journey since and yields 3.7% currently. Family-controlled operation in a supply-constrained business. Also in the not quite 4% club, QSR (owner of Burger King, Tim Horton's, Popeye's, and now Firehouse subs) yields 3.7%. They have been hit fairly strong by the pandemic, but more than cover their dividend with Free Cash Flow.
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ABBV
Apr 2, 2022 18:42:31 GMT
Post by bb2 on Apr 2, 2022 18:42:31 GMT
If one is thinking of selling, it probably means one thinks the price will either go down or languish. One possibility to deal with the question of selling is to sell covered calls. If it continues to rise and it gets called away, at least you made the extra cash. And of course you can put a sell stop or stop-limit. And you might think of pairing a stop loss with a call but here's a piece on why one might not want to do that. www.thebluecollarinvestor.com/covered-call-writing-should-we-use-stop-loss-orders/
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ABBV
Apr 2, 2022 20:13:26 GMT
comlb likes this
Post by bizman on Apr 2, 2022 20:13:26 GMT
One of the great things about Josh is that he really stuck to his knitting. I did learn a lot when he explored new territories. For tech, one that he did not pull the trigger on, but did write favorably about was Texas Instruments. Not a high yielder, but current 2.5% is 3x more yield than Apple and an excellent ten year track record. Good point about Josh. Actually, I have to give him partial credit for my venture into MSFT in July 2016 at around $55/share. Now I did a lot of other research and was impressed by what seemed like the tsunami of secular demand coming for the cloud business given the economics where I heard companies could dump their tech departments and save 80% by going to the cloud. But as one of the last gifts he gave to me, he did a deep dive on MSFT along with the M* analyst in the MDI newsletter. IIRC, at the time it was yielding almost 3% and his analysis said it should be able to grow 9 or 10% for a total return of 12-13%. While he didn't personally pull the trigger, I loaded up good thinking worst case it does really well, and if the cloud thing is real and has a huge secular growth cycle it could be a multi-bagger. Fortunately it has worked out very nicely thus far. God bless Josh and I hope he and his family are well. I would like to know his thinking these days and how it has evolved. As an aside, another former M* alum, Todd Wenning, who also wrote for the Motley Fool and was a fan of dividends, even writing a book called "Keeping Your Dividend Edge," now works for the growth shop Ensemble Capital, which manages the Ensemble Fund ENSBX. He has written some further research on their blog and his views seem to have evolved much more in the growth vein. My views have evolved too. I will always be grateful to Josh for the education he provided me. But dividends aren't the only thing. Growth and total return are still important things to consider too. And the key is finding whatever at a good price. Endlessly fascinating!
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Deleted
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ABBV
Apr 4, 2022 13:45:31 GMT
chang likes this
Post by Deleted on Apr 4, 2022 13:45:31 GMT
@slooow , you mention that VZ is one of the stocks you are looking at. I own a goodly about of VZ and have been content with it. I do like telecoms - good, growing dividends. I also hold BCE, a Canadian telecom. If you hold a Canadian stock in an IRA, they will not withhold taxes. In a taxable account, they withhold 15% for taxes. I was checking about foreign taxes being withheld in IRAs. Is it just Canada that does this - withhold in taxable, but not IRAs. I was reading this article from Benz. Let me know if anyone has a definitive answer here - www.morningstar.com/articles/914550/should-you-keep-foreign-stocks-out-of-your-ira
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ABBV
Apr 4, 2022 15:08:19 GMT
chang likes this
Post by kathiel on Apr 4, 2022 15:08:19 GMT
@slooow, The one other country I know of that doesn't withhold taxes on dividends paid into an IRA is the UK.
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ABBV
Apr 4, 2022 16:14:49 GMT
via mobile
Post by chang on Apr 4, 2022 16:14:49 GMT
@slooow , you mention that VZ is one of the stocks you are looking at. I own a goodly about of VZ and have been content with it. I do like telecoms - good, growing dividends. I also hold BCE, a Canadian telecom. If you hold a Canadian stock in an IRA, they will not withhold taxes. In a taxable account, they withhold 15% for taxes. I was checking about foreign taxes being withheld in IRAs. Is it just Canada that does this - withhold in taxable, but not IRAs. I was reading this article from Benz. Let me know if anyone has a definitive answer here - www.morningstar.com/articles/914550/should-you-keep-foreign-stocks-out-of-your-iraI knew about Canada, and that’s why I keep FICDX in my IRA. I’m surprised Christine didn’t highlight Vanguard’s poor treatment of foreign taxes in 1099s — namely, they do it for some funds, and not others. (Egregious omissions include Global Wellesley and Global Wellington.)
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