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The special nature of the Realty Income dividend allows the majority of it to be taxed as Income tax and not capital gains tax. Since this stock is marketed as an income stock and the mean age of the investor is well over fifty, many would enjoy lower tax brackets than in their prime earning years.

Hmmmm - maybe I don't understand this. The income that I have received as dividends from my holdings in O have always
been taxed as ordinary income, not capital gains. My view of this is quite negative - I would much prefer that they were taxed
as capital gains, which are taxed at a much lower rate than ordinary income is. But, alas, dividends ARE ordinary income and
not capital gains
.

This is true if the income is reinvested (via a DRIP or otherwise) or not - you still need to pay tax as ordinary income.


Dividends are not automatically taxable as income as opposed to capital. Sometimes due to the source of the declared dividend the dividend is taxed as capial gains. This is why companies issue Dividend Tax Status Reports.

The most recent report for O that I could dig up was for 1998:

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=105&STORY=/www/story/01-14-1999/0000844341

I found it on the Realty Income site through the news link. I don't know why they don't have a 1999 report. Perhaps because all dividends in 1999 were taxable as income as well and no clarification is needed.

My point about the mean age of O shareholders was merely to point out that most are already enjoying retirement and prefer the income tax classification as their dividend payments will probably not be enough to propel them from the lowest bracket. That is unless they have very significant O holdings.
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