Not all dividends are treated the same and the nuances can make a big difference to your ultimate investment return.

“Regular Dividends” and “Qualified Dividends”

In general, there are two different types of dividends – “regular dividends” and “qualified dividends”. One is taxed far more favorably than the other.  A so-called “qualified” dividend is given beneficial tax treatment because it is taxed at a lower more beneficial long-term capital gains tax rate.  For most individuals this rate is currently at 15%, but the rate can be lower or higher for very low or very high income earners.

For individuals whose income tax rate is in the 10% or 15% brackets, then the dividend Read More