What's All the Buzz About Dividend Funds?

What’s All the Buzz About Dividend Funds?

In May of 2003, Congress passed the Jobs Growth and Tax Relief Reconciliation Act. For investors, this was big news for two reasons.

First of all, those who receive stock dividends now benefit from a significant tax break—instead of being taxed at their ordinary income tax rate on these dividends, the maximum tax will be 15 percent.

This Act is retroactive to January 1, 2003.

In 2008, tax rates on dividends could revert to pre-2003 levels.

Secondly, the Act has encouraged companies that did not previously pay dividends to start, and companies that already did pay, to increase them.

More than 170 companies increased or started paying dividends in 2003.