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Anonymous
CSPX is more tax efficient for dividends but also has larger expense ratio than VOO. Is lower expense ratio or lower tax withholding more important?
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Chris
31 Jan 2021
Owner and Writer at Tortoisemoney.com
Expense ratio impact of choosing CPSX: 0.04%
Dividend Yield of VOO (as of today): 1.16%
Dividend yield impact of choosing VOO: 1.16% * 0.15 = 0.174%
Hence, CSPX is (from a cost/tax basis) more efficient.
However, do note that there may be potential factors that you may wish to consider such as liquidity, AUM etc, which I cover further in my article here!
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Calculations done by Chris above.
Shall bring in another point which is of equal or maybe more importance: Accumulating vs Distributing.
CSPX is an accumulating ETF, dividends are auto reinvested it. Unless your broker allows for fractional shares and dividend reinvestment without a cost then this is a factor to consider.
Would you want to collect dividends and the reinvest it with other sources of income?
Itโs a tricky question because it allows the flexibility of the dividends to be reinvested elsewhere. So it really depends on what you want to do with them.
Reinvesting those dividends will also incite extra cost but it doesnโt really matter if you are going to reinvest with your sources of income.