(Un)Qualified: The Dirty Little Secret of (Some) ETF Dividends

August 25, 2005


[1] . Because of the graduated income tax, the relative value of this tax cut rises with your income.

[2] .  Investors should pay particular attention to this. While an REIT yielding five percent may appear attractive, it has the same after-tax yield as an equity fund yielding approximately 3.8 percent.

[3] . A quirk in the tax law allows funds reporting 95 percent or more of their dividends as "qualified dividends" to pay out 100 percent of their dividends as "qualified."

[4] . Real estate investment trust, bond funds and international stock funds are excluded from this tally because dividends from these products do not serve as "qualified dividends" under the 2003 tax law.


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