Nontaxable Dividends

AAA

DEFINITION of 'Nontaxable Dividends'

Dividends from a mutual fund or some other regulated investment company that are not taxed. Taxes are not paid out because the fund invests in municipal and other tax exempt investments.

INVESTOPEDIA EXPLAINS 'Nontaxable Dividends'

The mutual fund must invest over 50% of its capital into tax exempt investments for the dividends to be classified as nontaxable.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Gross Dividends

    Similar in concept to gross income, gross dividends are the sum ...
  3. Ordinary Dividends

    A share of a company's profits passed on to the shareholders ...
  4. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
  5. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  6. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
RELATED FAQS
  1. If a long call is owned on the record date of a stock, is the owner of the option ...

    The owner of a long call for a stock is entitled to a dividend only if the option is exercised prior to the ex-dividend date, ... Read Full Answer >>
  2. When can I use the Dividend Discount Method (DDM) to value a stock?

    Investors can use the dividend discount model (DDM) for stocks that have just been issued or that have traded on the secondary ... Read Full Answer >>
  3. What is the average annual dividend yield of companies in the Internet sector?

    The average annual dividend yield of companies in the Internet sector is 0.02%. The dividend payout ratio for the sector ... Read Full Answer >>
  4. How is perpetuity used in the Dividend Discount Model?

    The basic dividend discount model (DDM) creates an estimate of the constant growth rate, in perpetuity, expected for dividends ... Read Full Answer >>
  5. What are the drawbacks of using the Dividend Discount Model (DDM) to value a stock?

    Drawbacks of using the dividend discount model (DDM) include the difficulty of accurate projections, the fact that it does ... Read Full Answer >>
  6. Should I purchase a master limited partnership (MLP) in my retirement account?

    Most investors should not purchase units in a master limited partnership, or MLP, in their retirement accounts. MLPs offer ... Read Full Answer >>
Related Articles
  1. Investing Basics

    How And Why Do Companies Pay Dividends?

    If a company decides to pay dividends, it will choose one of three approaches: residual, stability or hybrid policies. Which a company chooses can determine how profitable its dividend payments ...
  2. Personal Finance

    Should You Track The Cost Of Retirement Income?

    Today, workers face a challenge when saving for retirement, because retirement income is getting more expensive, and the savings are not keeping up.
  3. Mutual Funds & ETFs

    Is the PowerShares (PFEM) ETF a Good Bet Now?

    What you need to know if you are considering trading PowerShares Fundamental Emerging Markets Local Debt ETF.
  4. Mutual Funds & ETFs

    Anatomy of Emerging Markets Debt ETF (EMLC)

    This emerging market bond ETF offers a high yield, but there are dangers. Find out why.
  5. Trading Strategies

    How to Pick the Best Dividend Stocks

    Dividend stocks can make you rich, but you have to be patient.
  6. Options & Futures

    5 Gold Stocks that Pay Regular Dividends

    Five dividend paying gold stocks to put on your watch list.
  7. Stock Analysis

    4 Top Dividend-Paying Agriculture Stocks

    Here are four different ways to play dividend-paying agro stocks.
  8. Trading Strategies

    4 Quality Dividend Stocks You Need to Consider

    Looking for quality stocks that also pay dividends? Consider these four.
  9. Stock Analysis

    Top 6 Gas Stocks that Pay Regular Dividends

    A look at the top 6 dividend paying gas stocks.
  10. Investing

    Top Oil Stocks that Pay Regular Dividends

    Eyeing oil stocks that pay regular dividends? Consider these refinery plays.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center