1/3 of VSS dividends are nonqualified?

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1/3 of VSS dividends are nonqualified?

Postby letsgobobby » Fri Dec 21, 2012 10:46 pm

I was surprised to see that fully 1/3 of dividends from Vanguard small cap value are non qualified; I understand this means the fund received a dividend while holding the shares for less than 60 days. Why such a high percentage? Does this suggest an unexpected amount of turnover within the fund?
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Re: 1/3 of VSS dividends are nonqualified?

Postby grabiner » Fri Dec 21, 2012 11:15 pm

Dividends may be non-qualified for other reasons than a short holding period. Foreign dividends are not qualified if the corporation is not eligible for tax treaty benefits; even if there is a tax treaty with the country, it might not apply to this corporation. Payments in lieu of dividends (when the stock is lent to a short seller) are not qualified dividends. Distributions which were not subject to tax at the corporate level (such as income from REITs) are not qualified.

As a result, small-cap funds tend to have a lower percentage of qualified dividends than large-cap funds, and foreign funds tend to have a lower percentage than domestic funds. VSS (international small-cap) has only half qualified dividends.

It is possible to manage a fund for more qualified dividends; Tax-Managed Small-Cap and Tax-Managed International both have 100% qualified dividends, while none of Vanguard's other small-cap or international funds have 100%.
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Re: 1/3 of VSS dividends are nonqualified?

Postby letsgobobby » Fri Dec 21, 2012 11:52 pm

David, thanks. Forgot about the international implications. I think I should have put VBR in the thread title, because even VBR is only 72% qualified; but your other comments also explain that.
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Re: 1/3 of VSS dividends are nonqualified?

Postby SpringMan » Sat Dec 22, 2012 9:07 am

Speaking of VSS, their December dividend seems slow to show up. The ex-dividend date was 12/20 and there is no sign of it yet, today being 12/22. I hold this at VBS, makes me wonder if I would have seen this dividend if I held VSS at another brokerage. It is not being reinvested in VSS but rather swept to Prime MM. Nothing shows under transaction history. I know I just need to learn to be more patient. :D
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Re: 1/3 of VSS dividends are nonqualified?

Postby sscritic » Sat Dec 22, 2012 9:10 am

Is it Christmas yet?
Code: Select all
Ex-Dividend Date    Payable Date
  12/20/2012         12/27/2012
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Re: 1/3 of VSS dividends are nonqualified?

Postby SpringMan » Sat Dec 22, 2012 9:17 am

Thanks. That explains it. The Vanguard page I was looking at was only showing declaration date 12/18 and ex-dividend date of 12/20, missing IMO the most important date. Nope, not Christmas yet. :)
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Re: 1/3 of VSS dividends are nonqualified?

Postby sscritic » Sat Dec 22, 2012 9:19 am

SpringMan wrote:Thanks. That explains it. The Vanguard page I was looking at was only showing declaration date 12/18 and ex-dividend date of 12/20, missing IMO the most important date. Nope, not Christmas yet. :)

For distribution questions after (or in the middle of) the fact, I like the distributions tab on the fund or ETF page. That was the source of my information.
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Re: 1/3 of VSS dividends are nonqualified?

Postby livesoft » Sat Dec 22, 2012 9:32 am

SpringMan wrote:Speaking of VSS, their December dividend seems slow to show up. The ex-dividend date was 12/20 and there is no sign of it yet, today being 12/22. I hold this at VBS, makes me wonder if I would have seen this dividend if I held VSS at another brokerage. It is not being reinvested in VSS but rather swept to Prime MM. Nothing shows under transaction history. I know I just need to learn to be more patient. :D

At another brokerage you will see this dividend a day earlier than you will see it at VBS: viewtopic.php?f=1&t=87742
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: 1/3 of VSS dividends are nonqualified?

Postby letsgobobby » Sat Dec 22, 2012 9:40 am

Actually VSS is only 49% qualified and VBR only 2/3. I had my numbers wrong above.
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