After-Tax Return

You bought a bunch of Colonel Electric. It was demoted from General when it missed its last quarter. You bought a hundred grand worth of stock, which pays a 4% dividend. That 4%, or $4,000 a year in dividends, is payed quarterly, $1,000 a drop. The dividend is taxed at long-term gains rates and, in your blue state, you'll pay about a third of those gains in taxes.

So on the $4,000 gross, or 4% yield, on an after-tax return basis, you'll pay $4,000 minus about $1,300, or $2,700. So your after-tax return will be 2.7%...not the 4% you thought you were getting.