Skip to main content
No. of Recommendations: 3

I wrote, BTW, the pass-thru rule on qualified dividends is a significant reason to never to buy something like PFF (iShares S&P US Preferred Stock Index Fund) in a taxable account. This ETF pools qualified and non-qualified income and passes it all through as non-qualified dividends. A fine strategy in a tax-advantaged account, but a poor one in a taxable account.

To which you replied, I believe this is inaccurate. iShares provides a breakdown of qualified/nonqualified divs for use on your tax return:

For instance, here, PFF pays out almost 67% qualified dividend income, which you can claim on your tax return.

The more likely issue is that some *brokers* might not incorporate that information into their 1099s. But that's a broker issue, not an issue with the ETF structure itself.

I stand corrected.

Even so, a qualified dividend strategy is usually preferable (pun intended) in a taxable account. So while I might be wrong about the specifics, I'd still tend to avoid PFF and REITs in my taxable accounts because of the unqualified dividends and interest payments. With that said, I do have plenty of this stuff in my IRAs.

- Joel
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.