Qualified Dividend

Category: tax

A dividend that meets specific IRS requirements to be taxed at the lower long-term capital gains rate.

Most dividends are taxed at your high ordinary income rate. But if the stock meets holding period requirements, they become "qualified," meaning you pay only 15% or 20% instead of your full tax-bracket rate. It is a critical tax-planning tool for retirees.

Common Examples

• We focus our equity research on stocks likely to pay qualified dividends to ensure the client’s income remains tax-efficient.
• A key part of our tax-planning strategy is maximizing the percentage of total dividends that qualify for the preferred long-term tax rates.