If a retired individual lives on his or her investment income,then it would make sense for this person to prefer stocks with high payouts so he or she could receive cash without going to the trouble and expense of selling stocks.On the other hand,it would make sense for an individual who would just reinvest any dividends received to prefer a low-payout company because that would save him or her taxes and brokerage costs.

Question

Quizplus · Accepted Answer

This statement is true. A retired individual living on investment income would prefer high-payout stocks for cash flow, while someone reinvesting dividends would prefer low-payout stocks to save on taxes and brokerage costs.

If a Retired Individual Lives on His or Her Investment