It May Be Time to Rebalance Portfolio: Fund Manager

Regina Hing|Special to CNBC.com
Thursday, 29 Mar 2012 | 3:48 PM ET

With current dividend tax rates due to expire at the end of the year, is it time to rebalance your portfolio?

Photo: Comstock Images

Not necessarily. Even with the tax hike expected to jump from 15 percent to as high as 43.4 percent next year — unless Congress vetoes it — it won’t be that big a deal, says Doug MacKay, president and chief investment officer of investment management firm Broadleaf Partners.

“Taxes and the fees you pay for investment, they’re all secondary. To cite an example: If you’re paying a 50 percent tax rate on an Apple stock that has been paying a 2 percent dividend consistently for the last five or six years, that’s still a pretty good investment.”

He said a higher overall dividend tax rate might give people incentive to favor capital accumulation, but he cautions against shifting everything to non-dividend-paying growth stocks.

Investing in Dividend Stocks
Advice for dividend investing and insight on whether now is the time to change your dividend strategy, with Doug MacKay, Broadleaf Partners president/chief investment officer.

“There are opportunities on both sides. Look at total return potential,” MacKay said, citing Apple, Google, Chipotle (Mexican Grill), and Ralph Lauren as his top picks. “You really don’t know until you look at the overall opportunity.”

He also reminds investors that dividends are a long-term approach.

“I think the best opportunities in the market are for companies that aren’t paying a lot by way of dividends, so you can continue to let things grow,” he said.

Citing opportunities in natural gas and how chemical companies have started opening factories in the U.S. for the first time in decades, MacKay is optimistic about investing domestically, saying, “I think it’s America’s time to shine on the global scale.”

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Disclosure information was unavailable for Doug MacKay or his company.


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