1/3 of VSS dividends are nonqualified?

[letsgobobby]

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?

[grabiner]

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%.

[letsgobobby]

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.

[SpringMan]

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.

[sscritic]

Is it Christmas yet?

Code: Select all

Ex-Dividend Date    Payable Date
  12/20/2012         12/27/2012

[SpringMan]

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.

[sscritic]

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.

[livesoft]

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.

At another brokerage you will see this dividend a day earlier than you will see it at VBS: viewtopic.php?f=1&t=87742

[letsgobobby]

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