What are the differences between dividends and capital gains?

What are the differences between dividends and capital gains?

Dividends are payments made to shareholders from a company's profits, while capital gains are profits from selling an asset at a higher price than you paid.

Which is better for long-term investment?

It depends on your investment strategy. Dividends provide regular income, while capital gains can lead to larger profits if the asset appreciates significantly.

Are dividends taxed differently than capital gains?

Yes, dividends are typically taxed as ordinary income, while capital gains may be taxed at a lower rate, depending on how long you've held the asset.

Can I reinvest dividends?

Absolutely! Many investors choose to reinvest dividends to buy more shares, which can compound their returns over time.

What are some examples of dividend-paying stocks?

Some well-known dividend-paying stocks include companies like Coca-Cola, Johnson & Johnson, and Procter & Gamble.