Isn’t there a heavy tax penalty with this type of investment? I think it’s taxed at your income rate and not capital gains rates. But I’m no expert...
“Isn’t there a heavy tax penalty with this type of investment? I think it’s taxed at your income rate and not capital gains rates. But I’m no expert...”
(But I’m no expert...”). I agree! I think you meant to say long term capital gains rate. as short term capital gains are taxed at regular income rates.
If you hold the stock for more than a year then dividends are taxed at the long term capital gains rate.
If any dividends are considered return of capital they are capital gains.