Part 6/8:
When choosing stocks, consider not just the dividend yield, but also the historic performance and future potential of the company. Over the years, while IBM has stagnated and seen its stock price decline, McDonald's has enjoyed continued growth. Thus, even though IBM offers a higher dividend, investing in McDonald's could yield a better overall return due to its stock appreciation and resilience.
Dividend income also comes with tax implications. For example, individuals earning between $0-$40,000 may pay no taxes on their dividends, while those earning more might pay 15% or even 20% on their earnings.