Avoid these 5 mistakes when investing in dividend ETFs

Avoid these 5 mistakes when investing in dividend ETFs

02:33 - Expense Ratio
08:58 - Not understanding the index
13:12 - Wolf in sheep's clothing ETFs
17:14 - Not understanding taxes
21:53 - Not considering your time horizon

More about dividend growth investing:

I'm not a financial advisor and the content discussed today is merely my opinion and intended only for your entertainment. The content expressed in this video should not be considered as professional financial advice. This video may contain links through which we are compensated when you click on or are approved for offers. The information in this video was not provided by any of the companies mentioned, and has not been reviewed, approved, or otherwise endorsed by any of these entities.
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[alexz]

Foreign tax credits can reduce the tax burden on dividends received from foreign sources. When you receive dividends from foreign investments and have paid taxes on those earnings to a foreign government, you can often claim a foreign tax credit on your U.S. tax return. This credit offsets a portion of the U.S. tax liability on that income, thereby reducing your overall tax burden.

[jessicatran]

You answered something I was trying to figure out for a long time, which I didn’t realize was a common question. How we are “charged” the fees. I’m still confused but now that I know where to look I can look into it more to help me understand it better. Thank you for always delivering good content!

[Frugal_J]

I love Jake's vehicle example.

Buying high expense ratio ETFs is like booking a helicopter to take you from a building's ground floor to its second floor. The helicopter gets the job done, but is impractical.

But sometimes, buying lower expense ratio ETFs can be like getting what you pay for...lower expenses, lower performance.

Frugal J

[international_dividend]

Just to be clear on tax, there is no "international tax". You'll pay a tax if the jurisdiction where you're buying the stocks taxes non-residents (eg Canada) but not all jurisdictions do so. Here in Hong Kong there is no tax on dividends. But the 30% non-resident tax I'm levied by the US on US company dividends is brutal!

[Sylvan_dB]

Be aware that the expense ratio of special ETFs includes things that are only an accounting standard and not part of or paid to the management of that ETF. For example, a business dev ETF (BDC ETF) has to include the salaries paid by each BDC in the ETF in the expense ratio. If you hold each BDC individually you still pay that, but there is no easy way to find out how much is going to each BDC to cover that.

Some expenses related to covered calls are also reported in the expense ratio, but not paid to the fund managers.

JEPI and JEPQ get to hide those costs inside the ETNs as a simple reduction in the return of the ETN instead of calling it out as part of the expense ratio.

Foreign taxes can be claimed (offset your US taxes) if held in a taxable account. Not so if held in an IRA - you still pay, but you get no credit for paying it.

[roberts]

I would argue even someone younger should do [at least some] dividend investing. One thing I've learned is having a job is not guaranteed. Finding a new job when you get laid off, or fired, can take longer than you think. Having a dividend stream of income to live off when that happens can be a lifeline. Sure, have an emergency fund, but that isn't going to be able to earn when dividend investing can. While employed and you don't need the income, reinvest it.

[shivanarayanan]

Hey Jake, thanks again for great content
What would happen to our investments like SCHD or VYM if Schwab, Fidelity or Vanguard went bankrupt?

[jorgitodes]

Thanks Jake ! For watching out for us, I admit, I fell for some of the YieldMax ETFs for experimentation . Bought 6 totaling 2.75 % of my income portfolio….😂

[UltraRunner]

Would love if you did a new DGRO video. This is my #1 holding but curious on your thoughts on why it's still at the same range now since 2021. Thank you! Love the content.

[longbowrider]

Good video…can you create a video on a portfolio that is a ROTH account…I understand taxes in Reit’s…but would it make a difference in a Roth? What three/four ETF would you recommend & the percentages with different age brackets? Do international taxes still apply in a Roth?Thanks!

[GunGrave]

Haha good analogy with the movie Multiplicity. I forgot about that one in the 90s

[mikesurel]

When you mentioned copy of a copy i was hoping for mulitiplicity 😁

[persieprince]

Ishares divb (buyback & dividends index) is now 0.05 expense ratio

[Alex-heve]

This is a typo. Just 15% withholding tax for Canadian stocks (TD, BCE, BNS, etc) because of US Canada treaty. Plus with your US taxes you will recover these withholding as a foreign tax credit. No withholding lf you keep Canadian stocks in IRA.

[TheHeshman]

Movie: Multiplicity
Michael Keaton is amazing

[Seoulsearch]

Lol, that clip! I can't name it but I definitely recognized Michael Keaton from that era! Great video as always. 👍🏼

[kirintz]

Isn't there a tax credit for foreign dividends? Like 600$ i think

[mariex]

Luv the copy concept - LOL :) YieldMax ETF is one that I don't understand; therefore, I stay away altogether. My investment thesis is a long term one. I would like to reach MARS with my long term investment. Quality index and amazing companies with a strong MOAT will eventually win the race. 🤗

[zootzoot]

Like your videos I'm torn between bst vs jepq performance vs expense ratio I wondering if it's worth it?

[phillipellingson]

I have a short time horizon, 7-8 years. Would iShares HDV be a good choice rather than SCHD or DGRO?