Dividend income compared with other income investments
Dividend stocks pay part of company profits to shareholders. They can raise payouts over time – and can also cut them, and their prices move with the stock market.
How dividends are taxed
The IRS treats qualified dividends at lower capital-gains rates and ordinary dividends as ordinary income (Topic 404). REIT dividends are mostly ordinary. Your state usually taxes all of them. That means a 5% dividend and a 5% bond can leave you with different amounts.
Other sources of regular income
- Treasuries (no state tax), municipal bonds (often no federal tax).
- Company bonds and bond funds.
- REITs and income funds.
- Filed offerings with stated yields, for those who accept less liquidity.
Compare on one scale
IncomeGrid has 40,000+ investment options screened, ranked by yield and risk level 1–5. IncomeGrid ranks every item by yield after tax for where you live: federal, state and each investment type (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).
Compare dividends with other income →
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