Loading the player...

What are 'Ordinary Dividends'

Ordinary dividends are a share of a company's profits passed on to the shareholders on a periodic basis. Ordinary dividends are taxed as ordinary income and are reported on Line 9a of the Schedule B of the Form 1040. All dividends are considered ordinary unless they are specifically classified as qualified dividends.

BREAKING DOWN 'Ordinary Dividends'

Dividend income is one of the major advantages of stock ownership. Companies will report all aggregate ordinary dividends in box 1 of the Form 1099-DIV. Mutual fund companies pay and report dividends in the same manner.

Find out how ordinary dividends affect your tax return; check out Who needs to fill out IRS Form Schedule B?

RELATED TERMS
  1. Ordinary Income

    Ordinary income is composed mainly of wages, salaries, commissions ...
  2. Qualified Dividend

    A qualified dividend is a type of dividend subject to capital ...
  3. Ordinary Loss

    An ordinary loss is a loss realized from normal business operations, ...
  4. Dividend Rate

    The dividend rate is the total expected dividend payment from ...
  5. Dividend Policy

    Dividend policy structures the dividend payout a company distributes ...
  6. Capital Dividend

    A capital dividend is a type of payment a firm makes to its investors ...
Related Articles
  1. Financial Advisor

    How mutual funds pay dividends: An overview

    The process by which mutual fund dividends are calculated, distributed and reported is fairly straightforward in most cases. Here's a look.
  2. Taxes

    3 Tax Implications of Dividend Stocks

    Dividend paying companies are attractive in a low interest rate environment, but income seeking investors have to be careful of the potential tax hit.
  3. Investing

    5 Reasons Why Dividends Matter to Investors

    Learn five of the primary reasons why dividends are of significant importance for the overall performance of stock market investments.
  4. Investing

    Put Dividends to Work in Your Portfolio

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

    Is Dividend Investing a Good Strategy?

    Understanding dividends and how they generate steady income for shareholders will help you become a more informed and successful investor.
  6. Investing

    The Best 8 Funds For Regular Dividend Income

    Here's a list of the top mutual funds which pay regular dividends, for frequent income.
  7. Investing

    Introduction To Dividends

    Investing in dividend-paying stocks can be an effective method of building long-term wealth.
  8. Financial Advisor

    4 Reasons a Company Might Suspend Its Dividend

    Learn about the four most common reasons a company may choose to suspends its dividends, including financial trouble, funding growth and unexpected expenses.
  9. Investing

    How to use the dividend capture strategy

    Learn how to implement the dividend capture strategy, an aggressive, income-focused stock trading strategy investors can use to increase equity profits.
RELATED FAQS
  1. If I reinvest my dividends, are they still taxable?

    If you reinvest your dividends, you still pay taxes as though you received the cash. Stock dividends are generally not taxable ... Read Answer >>
  2. How many votes am I entitled to, if I own ordinary shares of a company?

    Understand what an ordinary share is and how it may benefit investors. Learn how many votes an investor is entitled to, if ... Read Answer >>
  3. What are the advantages of ordinary shares?

    Dividends and ownership rights are two advantages of investing in ordinary shares. Read Answer >>
Trading Center