Qualified Dividend

AAA

DEFINITION of 'Qualified Dividend'

A type of dividend to which capital gains tax rates are applied. These tax rates are usually lower than regular income tax rates.

INVESTOPEDIA EXPLAINS 'Qualified Dividend'

Ordinary dividends that do not qualify for this tax preference are taxed at an individual's normal income tax rate.

In order to qualify:
1. The dividend must have been paid by an American company or a qualifying foreign company.
2. The dividends are not listed with the IRS as dividends that do not qualify.
3. The required dividend holding period has been met.

RELATED TERMS
  1. Dividend

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

    A share of a company's profits passed on to the shareholders ...
  3. Holder Of Record

    The name of the person who is the registered owner of a security ...
  4. Record Date

    The date established by an issuer of a security for the purpose ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Ex-Dividend

    A classification of trading shares when a declared dividend belongs ...
RELATED FAQS
  1. If I reinvest my dividends, are they still taxable?

    Cash dividends tend to fall into two broad tax categories: qualified dividends and ordinary dividends. However, some companies ... Read Full Answer >>
  2. Which stocks in the wholesale sector pay the highest dividends?

    The wholesale sector consists of a diverse group of companies that operate in industries including auto parts, industrial ... Read Full Answer >>
  3. How can I check to see if an ETF’s price reflects its asset value?

    An investor can check the net asset value (NAV) for an exchange-traded fund (ETF) on the website for the ETF after the market ... Read Full Answer >>
  4. How does a company decide when it is going to split its stock?

    There are no set guidelines or requirements that determine when a company will split its stock. Often, companies that see ... Read Full Answer >>
  5. Which insurance companies pay the highest dividends?

    For income investors, finding companies that pay above-average dividends consistently is key to creating and sustaining a ... Read Full Answer >>
  6. How is fair value calculated in the futures market?

    The fair value is the theoretical calculation of how a futures stock index contract should be valued considering the current ... 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. Taxes

    Using Tax Lots: A Way To Minimize Taxes

    The method of identifying cost basis can help you to get the most out of reduced tax rates.
  3. Fundamental Analysis

    Why Dividends Matter

    Seven words that are music to investors' ears? "The dividend check is in the mail."
  4. Investing Basics

    How Dividends Work For Investors

    Find out how a company can put its profits directly into your hands.
  5. Investing

    The Strong Dollar’s (Real) Toll On Tech Stocks

    A large portion of U.S. technology companies’ sales occur overseas, given the strong international business and consumer demand from many U.S. tech firms.
  6. Mutual Funds & ETFs

    Why You May Want To Be (And Stay) In Bonds

    Bonds are complicated, and it’s easy to feel intimidated or confused. Fortunately, you don’t need to be a numbers geek to be an informed investor.
  7. Economics

    The Big Chill: What’s Wrong With The U.S. Consumer

    Based on the most recent April data, investors may, once again, be disappointed when the second-quarter gross domestic product (GDP) report comes in.
  8. Mutual Funds & ETFs

    5 Dividend ETFs with Growth Potential

    A quick look at a few ETFs with substantial growth potential.
  9. Investing

    Where Dividend Investors Are Seeking Income

    Dividend investors are turning to sectors such as health care, technology and financial services where the earnings seem strong and the Fed seems distant.
  10. Professionals

    With Rates Low, Where Can Advisors Find Yield?

    There are many different options — both conventional and unconventional — available for financial advisors seeking yield and alpha for their clients.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center