What are high yield dividend stocks?

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A dividend is a payment from a company to shareholders, akin to a profit distribution. According to Investopedia, a dividend yield is a calculation showing how much is paid out as a function of the current stock price.

High-Yield Qualified Dividends

Qualified dividends are those from any company that pays corporate tax. According to the IRS, the tax rate on qualified dividends was 15 percent as of 2010. A qualified dividend stock that yields more than three times the after-tax returns compared to U.S. Treasury bills is considered high yield.

High-Yield Non-Qualified Dividend

Dividends arising from companies that do not pay corporate taxes are termed non-qualified dividends. An example of a type of company that does not pay corporate tax is a real estate investment trust. Non-qualified dividends are treated as ordinary income.

High-Yield Dividend Foreign Stocks

Foreign stocks that pay substantial dividends are called foreign high-yield dividend stocks. In most scenarios, taxes must be paid to the country where the stock is based, as well as to the IRS.

High-Yield Special Dividend Stocks

Companies sometimes pay a special one-time dividend as opposed to the usual regularly paid dividends. This results in the stock being a special high-yield dividend stock.

High-Yield Distressed Stocks

When the price of a stock drops dramatically, the yield skyrockets, making it a high-yield distressed stock. Purchasing these stocks can be very risky.

Source:

Investopedia: Dividend Yield

IRS Topic 404: Dividends

More Information:

Dividend Detective: List Dividend Paying Stocks

Dividend.com: High Yield Dividend Stocks

Marketwatch.com: Watch Out for Falling Dividends

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What are high yield dividend stocks?

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