Ordinary dividends

Ordinary dividends are that portion of a company's retained earnings that are distributed to shareholders on a regular basis. These dividends are classified as ordinary income, so ordinary income tax rates apply to them. Most dividends are considered to be ordinary dividends, and so are taxed at the higher ordinary income tax rate. Only the income from qualified dividends can be taxed at the lower capital gains rate.

Related Courses

Corporate Finance 
Treasurer's Guidebook