When you receive a $2 dividend per share on your 100 shares, your total dividend income is $200.
Given,
Dividend per share - $2
Shares - 100
Total dividend income - ?
In order to calculate total dividend income, $2 dividend will be multiplied by 100 shares.
However, dividend per share × total shares
= $2 × 100
= $200
Hence, the total dividend income is $200.
Dividend income is considered income for that tax year rather than a capital gain. It is paid out of the profits of a corporation to the stockholders. Thus, dividends are qualified as capital gains instead of income by the U.S. federal government taxes.
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