Best stocks that do not pay dividends?

[JustGotScammed]

I am going to build a portfolio of stocks that do not pay dividends for my taxable account. Because I do not want to pay dividend taxes. What stocks that do not pay dividends do you consider to be the best long-term investments? Even if this is not how you personally do it, I would still be interested in knowing what individual non-dividend paying stocks you would buy if this were your approach.

And I'm only quasi-literal with the requirement that the stock not pay a dividend. If the dividend yield is 0.1% or something near zero, I'd also consider it.

[oldlongbeard]

BRK-B

[afan]

If you want a single stock then BRK is more diversified than most individual companies. But better to have a portfolio of stocks than just one.
Many mutual fund companies have tax managed mutual funds that endeavor to pay low dividends and capital gains. Almost certainly better than assembling such a portfolio yourself.

[doobiedoo]

BRK.b

[dukeblue219]

Nearly any "growth" ETF is an option. VUG, for example, has a 0.04% ER and the current yield is 0.45%.

That's not zero percent but it's not going to be a horrible tax drag while still being very diversified.

I'd argue for BRK myself for this job, but lots of other options under half a percent yield.

[enad]

Berkshire Hathaway B shares (BRK.B). Berkshire Hathaway is a conglomerate, that is a corporation that owns a controlling stake in companies that operate in different industries.

BRK.B vs. S&P500 from Jan 2016 to Feb 2025

[mhadden1]

Nearly any "growth" ETF is an option. VUG, for example, has a 0.04% ER and the current yield is 0.45%.

Could even buy a corresponding value fund in tax-deferred, to achieve an overall blend result.

[JustGotScammed]

Point made/understood on Berkshire. Now, for the other 25-35 stocks?

[dukeblue219]

Point made/understood on Berkshire. Now, for the other 25-35 stocks?

Stock picking is hard and unpredictable. Nobody here can give you a list of 25 "good" stocks that don't pay dividends. The beauty of BRK is that it owns dozens of companies and invest in dozens of others, operating kind of like an accumulating ETF.

If you want to pick stocks based on low yield just start with any online stock screener and sort at your preferences.

[RickBoglehead]

[FootballFan5548]

Over the last 5-6 years I have thrown some extra cash into AMZN when I've had it. Not a ton, but I've got a couple hundred shares now. It doesn't pay a dividend. It had/has performed very well for me from the $80's/share up to $230/share, and now back to $210/share.

Just an option of a large company that doesn't pay a dividend

[retiredjg]

Point made/understood on Berkshire. Now, for the other 25-35 stocks?

I would not put 25 to 35 stocks in taxable. If you just cannot tolerate total stock index (which is pretty darn tax-efficient), use a large cap growth index fund in taxable (which would be a bucket of stocks that pay little or no dividends).

[Valuethinker]

Point made/understood on Berkshire. Now, for the other 25-35 stocks?

Because of its size and diversification, BRK is not a bad proxy for the US market.

It is very underweight, AFAIK, healthcare. And the only big tech holding was Apple? Which they have sold down.

But, broadly, BRK is it. If you searched "Conglomerates" among ETFs or the S&P indices, you might find some other names?

Given their size, it's tricky to shadow index if you do not hold Nvidia, Microsoft, Apple, Alphabet, possibly Amazon and Meta.

Nvidia pays a minimal dividend. Alphabet and Meta do not pay dividends (i believe?).

[exodusNH]

I am going to build a portfolio of stocks that do not pay dividends for my taxable account. Because I do not want to pay dividend taxes. What stocks that do not pay dividends do you consider to be the best long-term investments? Even if this is not how you personally do it, I would still be interested in knowing what individual non-dividend paying stocks you would buy if this were your approach.

And I'm only quasi-literal with the requirement that the stock not pay a dividend. If the dividend yield is 0.1% or something near zero, I'd also consider it.

Does VTI's dividend rate of 1.2-1.5% really make a material difference? Most are qualified, meaning they are taxed at the long-term capital gains rate.

You could hold a growth fund in taxable and balance it in tax-advantaged with the complementary value fund.

Trying to pick 25-30 stocks just to avoid a minuscule amount of taxes is counterproductive. It's an uncompensated risk.

[exodusing]

Because I do not want to pay dividend taxes.

It's generally a mistake to let tax minimization efforts overwhelm your investment strategy, including sensible diversification.

Trying to pick 25-30 stocks just to avoid a minuscule amount of taxes is counterproductive. It's an uncompensated risk.

Yep.

[retired@50]

... Alphabet and Meta do not pay dividends (i believe?).

As of June of 2024...

Alphabet (GOOG and GOOGL) each pay 20 cents per share per quarter.
Meta pays 50 cents per share per quarter.

At least according to what I can see from Yahoo! Finance.

Regards,

[WalkingBackToHouston]

Because I do not want to pay dividend taxes.

It's generally a mistake to let tax minimization efforts overwhelm your investment strategy, including sensible diversification.

Trying to pick 25-30 stocks just to avoid a minuscule amount of taxes is counterproductive. It's an uncompensated risk.

Yep.

+1

[WalkingBackToHouston]

Because I do not want to pay dividend taxes.

It's generally a mistake to let tax minimization efforts overwhelm your investment strategy, including sensible diversification.

Trying to pick 25-30 stocks just to avoid a minuscule amount of taxes is counterproductive. It's an uncompensated risk.

Yep.

+1

[retiringwhen]

Just buy VUG (Vanguard Growth Fund) in taxable and VTV (Value) in your IRA, you can avoid most of the dividend income without distorting your asset allocation by chasing the tax dragon instead of a balanced investing approach.

I have been doing it for almost 7 years to great results albeit with a bit more effort to keep the AA balanced.Vanguard Tax Efficiency Report



See these threads:
viewtopic.php?t=449231
viewtopic.php?t=405804

[WalkingBackToHouston]

Just buy VUG (Vanguard Growth Fund) in taxable and VTV (Value) in your IRA, you can avoid most of the dividend income without distorting your asset allocation by chasing the tax dragon instead of a balanced investing approach.

I have been doing it for almost 7 years to great results albeit with a bit more effort to keep the AA balanced.Vanguard Tax Efficiency Report



See these threads:
viewtopic.php?t=449231
viewtopic.php?t=405804

You might not want to displace bonds and other ordinary income producing assets from your IRA ... so it's a bit more complicated than just balancing the equities...

[retiringwhen]

The linked threads discuss the tradeoffs in some detail.

Yes, you need equity space in the IRAs and other tax deferred/Roth accounts to make this work. A bit more analysis too.

Much less distorting than loading up on BRK

[JustGotScammed]

Just buy VUG (Vanguard Growth Fund) in taxable and VTV (Value) in your IRA, you can avoid most of the dividend income without distorting your asset allocation by chasing the tax dragon instead of a balanced investing approach.

I have been doing it for almost 7 years to great results albeit with a bit more effort to keep the AA balanced.Vanguard Tax Efficiency Report



See these threads:
viewtopic.php?t=449231
viewtopic.php?t=405804

Phenomenally interesting chart. Thank you.

[exodusNH]

Because I do not want to pay dividend taxes.

It's generally a mistake to let tax minimization efforts overwhelm your investment strategy, including sensible diversification.

Trying to pick 25-30 stocks just to avoid a minuscule amount of taxes is counterproductive. It's an uncompensated risk.

Yep.

Yeah. The easiest way to pay no taxes is to earn no income and have no wealth. Mission accomplished, though not one I would choose to accept.

[GoldStar]

Are you sure they are publically traded?

OP: there are stock screening tools to find what you are looking for - it is what I used to do before I came to realize that individual stocks picking was futile. Why not just use your brokerage's tools for your selections?
Since this is bogleheads - you probably are not asking the right crowd - you could try reddit.

[anoop]

What will you do if you buy some now and then they start paying a dividend later?

[jjj_22]

Do you really think you can pick 25 stocks that will outperform VTI-minus-its-miniscule-tax-drag?

Almost all professional fund managers fail to do that over the long term.

I don’t think you stand a chance, but good luck!

[arcticpineapplecorp.]

Point made/understood on Berkshire. Now, for the other 25-35 stocks?

1. you're letting the tax tail wag the investment dog.
2. owning 25-30 stocks means you have a high probability of missing out on the 4% of all stocks that produce the return of the entire market and risking serious underperformance as a result:

Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills. These results highlight the important role of positive skewness in the distribution of individual stock returns, attributable both to skewness in monthly returns and to the effects of compounding. The results help to explain why poorly-diversified active strategies most often underperform market averages.

source: https://papers.ssrn.com/sol3/papers.cfm ... id=2900447

best of luck, you're gonna need it!

[JustGotScammed]

What will you do if you buy some now and then they start paying a dividend later?

I will collect the dividends and reinvest them into a stock that does not pay dividends.

[CyclingDuo]

I am going to build a portfolio of stocks that do not pay dividends for my taxable account. Because I do not want to pay dividend taxes. What stocks that do not pay dividends do you consider to be the best long-term investments? Even if this is not how you personally do it, I would still be interested in knowing what individual non-dividend paying stocks you would buy if this were your approach.

And I'm only quasi-literal with the requirement that the stock not pay a dividend. If the dividend yield is 0.1% or something near zero, I'd also consider it.

More than over 400 of the S&P 500 companies pay dividends. Why would you not just pay the tax on qualified dividends of a diverse portfolio in a taxable account, and instead try to avoid that by purchasing a less diverse group of individual stocks when it comes to total return investing?

We all get to deal with dividends, but with the dividend yield being so low for the index funds, it's not going to move the needle much even if you have well over $1M in taxable.

CyclingDuo

[afan]

I assume Justgotscammed is trying to avoid a tax cliff, hence the desire to avoid taxable dividends. Perhaps if they were to explain their goals, we might have suggestions that are better than creating a highly undiversified portfolio.

[anoop]

With the added restriction of "no dividends" you will have even less leeway than these funds.
https://x.com/PeterMallouk/status/1896924844530315343

[Wagnerjb]

You should be able to easily search for Large Cap stocks that don't pay a dividend, or pay a tiny one. Don't waste your time trying to "pick" stocks that will outperform. Your objective is to build a diversified portfolio that is highly tax efficient. So "select" stocks for your portfolio based on how they fit - meaning that they are from different sectors and industries.

If you do this properly, you will have a passive low cost portfolio that you can actively tax manage. If you can tax loss harvest, that will yield very real benefits. Also, if your tax loss harvesting results in tax arbitrage the benefits are significantly higher. Tax arbitrage would be when your tax loss saves you income tax at (for example) the 24% tax bracket, but you never pay tax gains in the future. There are many ways to not pay tax on the gains - gift the highly appreciated stock to your kids who pay 0% capital gains tax, donate the highly appreciated shares to charity, leave them to heirs, or sell them yourself if you have a very low income year.

Focus on principles that Bogleheads generally agree on - be diversified, be low cost, and be highly tax efficient.

[JustGotScammed]

You should be able to easily search for Large Cap stocks that don't pay a dividend, or pay a tiny one. Don't waste your time trying to "pick" stocks that will outperform. Your objective is to build a diversified portfolio that is highly tax efficient. So "select" stocks for your portfolio based on how they fit - meaning that they are from different sectors and industries.

If you do this properly, you will have a passive low cost portfolio that you can actively tax manage. If you can tax loss harvest, that will yield very real benefits. Also, if your tax loss harvesting results in tax arbitrage the benefits are significantly higher. Tax arbitrage would be when your tax loss saves you income tax at (for example) the 24% tax bracket, but you never pay tax gains in the future. There are many ways to not pay tax on the gains - gift the highly appreciated stock to your kids who pay 0% capital gains tax, donate the highly appreciated shares to charity, leave them to heirs, or sell them yourself if you have a very low income year.

Focus on principles that Bogleheads generally agree on - be diversified, be low cost, and be highly tax efficient.

Exactly. That is what I am trying to build. Unfortunately, most online forums dedicated to stock-picking only discuss momentum/meme stocks. I understand most Bogleheads index, but I was hoping they could turn off their personal preference for this topic and actually answer the question. i.e. if Bogleheads had to pick individual stocks, which ones would they choose? And then share the ones with zero or near-zero dividends since that is what I am after. I was hoping someone was going to, say, talk about O'Reilly Autoparts or Constellation Software or something, but alas, so far no.

[tibbitts]

if Bogleheads had to pick individual stocks, which ones would they choose?

What makes you believe that anyone on this forum has any expertise in choosing individual stocks?

[exodusNH]

You should be able to easily search for Large Cap stocks that don't pay a dividend, or pay a tiny one. Don't waste your time trying to "pick" stocks that will outperform. Your objective is to build a diversified portfolio that is highly tax efficient. So "select" stocks for your portfolio based on how they fit - meaning that they are from different sectors and industries.

If you do this properly, you will have a passive low cost portfolio that you can actively tax manage. If you can tax loss harvest, that will yield very real benefits. Also, if your tax loss harvesting results in tax arbitrage the benefits are significantly higher. Tax arbitrage would be when your tax loss saves you income tax at (for example) the 24% tax bracket, but you never pay tax gains in the future. There are many ways to not pay tax on the gains - gift the highly appreciated stock to your kids who pay 0% capital gains tax, donate the highly appreciated shares to charity, leave them to heirs, or sell them yourself if you have a very low income year.

Focus on principles that Bogleheads generally agree on - be diversified, be low cost, and be highly tax efficient.

Exactly. That is what I am trying to build. Unfortunately, most online forums dedicated to stock-picking only discuss momentum/meme stocks. I understand most Bogleheads index, but I was hoping they could turn off their personal preference for this topic and actually answer the question. i.e. if Bogleheads had to pick individual stocks, which ones would they choose? And then share the ones with zero or near-zero dividends since that is what I am after. I was hoping someone was going to, say, talk about O'Reilly Autoparts or Constellation Software or something, but alas, so far no.

You're basically asking vegans for steak recommendations.

[Valuethinker]

... Alphabet and Meta do not pay dividends (i believe?).

As of June of 2024...

Alphabet (GOOG and GOOGL) each pay 20 cents per share per quarter.
Meta pays 50 cents per share per quarter.

At least according to what I can see from Yahoo! Finance.

Regards,

Thank you!

Some types of investors (perhaps US pension funds or insurers, but definitely some investors based in other jurisdictions) cannot own a stock if it pays no dividend. I know an Income Fund (mutual fund) manager who held Nvidia (the ultimate Growth stock) because it pays a very small dividend. Saved their performance in recent years.

[Harry Livermore]

OP, have you ever utilized any of the tools/ methods of the Better Investing nonprofit group? They used to be the NAIC: National Association of Investment Clubs. They have a stock/ company analysis method that evaluates metrics and a focus on value. I used to belong to an investment club and we found their resources very helpful. Their Stock Selection Guide is a helpful first-pass screener for companies you may wish to evaluate further. You could perhaps set some criteria on your brokerage's screener; no dividend obviously, then others, such as company size or whatever is important to you, and run some of those candidates through the SSG.
Or, I'm sure they have a forum. It's possible a member or a club has already built a portfolio such as the one you are seeking.
https://www.betterinvesting.org
I no longer invest in individual stocks, but I'm also not against it. I think you won't get much coaching on picking stocks here; as someone upthread said, it's like asking a group of vegans which steakhouse is the bets.
Cheers

[Wagnerjb]

Your task isn't very hard. Just find a stock screener online. Sort the companies by dividend yield, with the lowest (0%) at the top. You will also want to sort out the very small companies, so select a market cap limit that suits you. That gives you the pool of companies. Now select the ones that form a diversified portfolio. I did this 20 years ago, and the challenge you will find is trying not to be too heavy in the Tech industry.

Trying to "pick" winners is wasting time and not productive. You don't need recommendations from others for this strategy, just be sure to be well diversified.

[FoolMeOnce]

Exactly. That is what I am trying to build. Unfortunately, most online forums dedicated to stock-picking only discuss momentum/meme stocks. I understand most Bogleheads index, but I was hoping they could turn off their personal preference for this topic and actually answer the question. i.e. if Bogleheads had to pick individual stocks, which ones would they choose? And then share the ones with zero or near-zero dividends since that is what I am after. I was hoping someone was going to, say, talk about O'Reilly Autoparts or Constellation Software or something, but alas, so far no.

You're basically asking vegans for steak recommendations.

Try Meati.

[JustGotScammed]

Your task isn't very hard. Just find a stock screener online. Sort the companies by dividend yield, with the lowest (0%) at the top. You will also want to sort out the very small companies, so select a market cap limit that suits you. That gives you the pool of companies. Now select the ones that form a diversified portfolio. I did this 20 years ago, and the challenge you will find is trying not to be too heavy in the Tech industry.

Trying to "pick" winners is wasting time and not productive. You don't need recommendations from others for this strategy, just be sure to be well diversified.

Which screener can do this?

[Walkure]

Wait until May and buy AAUS when it starts trading. From the fine tax averse fellows who brought us BOXX.

[Wagnerjb]

Your task isn't very hard. Just find a stock screener online. Sort the companies by dividend yield, with the lowest (0%) at the top. You will also want to sort out the very small companies, so select a market cap limit that suits you. That gives you the pool of companies. Now select the ones that form a diversified portfolio. I did this 20 years ago, and the challenge you will find is trying not to be too heavy in the Tech industry.

Trying to "pick" winners is wasting time and not productive. You don't need recommendations from others for this strategy, just be sure to be well diversified.

Which screener can do this?

I did this 20 years ago and it wasn't hard. Right now I just did a google search and the first hit was Dividend.com. They show a half dozen features of each stock. Click on dividend yield to see the highest or lowest. The lowest gives you a bunch with 0% dividend yield. It also shows the market cap. All you have to do is find the stocks to fit your portfolio, so you will need to eliminate preferred stocks or foreign stocks or tiny stocks. Then figure out which industry they are in for a balanced portfolio.