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When investors hear or read the words "penny stocks," it is rare that the term "dividend yield" is part of the conversation. Still, there are some out there that pay investors pretty good yields. Given the current volatility in the market and the confluence of two important events, we believe that the time is right to start buying these overlooked gems.
The first event revolves around the tax on dividends. Early this year there was great concern regarding the huge expected increase in taxes on dividends, slated to occur beginning in 2013.
In fact until last week, the conventional wisdom was that unless Congress took action, the top tax rate for the highest earners on most dividends would jump from the current 15% to a whopping 43.4% next year. That rate combines the maximum income-tax rate of 39.6% - since dividends will once again be taxed as regular income - plus a 3.8% tax on investment income as part of the health-care overhaul passed in 2009.
Ridiculous, right?
Since anything related to taxes is automatically a political issue, recent news bodes well for these payout-paying prospects. A number of Senate democrats are breaking ranks with President Obama and have put forth a plan that raises dividend taxes to 20%.
To read more click here >> or visit http://www.pennystockjunction.com
When My Stock Collapses
From time to time, we emphasize the importance of understanding risk and risk management in order to record total portfolio gains. This is very important in the summertime, as it is not unusual for penny stocks to flounder on low volume before picking up again in the fall.
Regardless of seasonality, we all know that a stock we buy will go down at some point. Sometimes it can decline incrementally. But more often than not, when a penny stock declines, it can be a pretty big move down.
There are a few schools of thought as to what to do in this situation, depending upon the circumstances. After all, each scenario is different. However, by following these strategies, meaningful stock losses can at least be minimized, if not avoided altogether.
Let's assume you just bought "Stock A." One day, with no news on the stock or any material news on stocks in the industry, Stock A is inexplicably down 12% on lighter-than-average volume. What do you do? Your options are pretty simple. You can either:
a) Stand pat.
b) Buy more.
c) Sell a portion.
d) Sell it all.
To read more click here >> or visit http://www.pennystockjunction.com
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