Is there an advantage to starting to accumulate dividend stocks and ETFs like SCHD and DGRO in my 401K self managed fund. Is there any reason not to do that? The dividends would reinvest tax deferred for decades

I was thinking it may grow enough to pay the electric bill with dividends in a few decades or something along those lines.

Being able to pay an electric bill is a bit aggressive. Maybe shoot for Netflix.

I wish my investment accounts grew as fast as my energy bills have.

BenTheGoodAg said:

---

I wish my investment accounts grew as fast as my energy bills have.

---

After decades of accumulating shares at lower prices on stocks that regularly raise their dividend I would think the curve would start to go up faster

There are a ton of dividend ETF's and SMA's out there, research a few and try one.

https://investor.vanguard.com/investment-products/etfs/profile/vig

Throw VYM and VYMI into your dividend universe as well. SCHD is a little sector heavy in certain areas so I use an allocation of VYM to balance that out.

2wealfth Man said:

---

Throw VYM and VYMI into your dividend universe as well. SCHD is a little sector heavy in certain areas so I use an allocation of VYM to balance that out.

---

Doesn't DGRO accomplish that?

Do MLPs cause issues in a tax deferred account?

yes, MLP's are very problematic in tax deferred accounts. When you own a partnership share you are considered as having participation in a business and all partnership income allocated to you (except a $1,000 exclusion) is considered as UBTI (unrelated business taxable income).

Note: As a partner, pay taxes on income allocated to you based on your ownership percentage, not distributions received.

Alerian MLP ETF is a good way around this as you don't own the partnership units directly (ticker AMLP)

2wealfth Man said:

---

yes, MLP's are very problematic in tax deferred accounts. When you own a partnership share you are considered as having participation in a business and all partnership income allocated to you (except a $1,000 exclusion) is considered as UBTI (unrelated business taxable income).

Note: As a partner, pay taxes on income allocated to you based on your ownership percentage, not distributions received.

Alerian MLP ETF is a good way around this as you don't own the partnership units directly (ticker AMLP)

---

MLPs create a lot of tax problems in general. I'm a tax preparer, and my clients that are heavy in MLPs rack up a lot of extra time on their returns - especially if they actively trade them.

You may get some tax benefits out or the deal, but it adds a lot of complications to tax preparation compared to stocks/mutual funds.

Just something to consider...