Destra Insights

Qualified dividend income is a part of the tax rule that allows certain dividends from US corporations and qualified foreign corporations to be taxed at rates lower than ordinary income rates. This may equate to substantial tax savings for investors, especially those in higher tax brackets. While QDI is often associated with common equity dividends many preferred securities issue dividends which qualify for this tax treatment as well. Historically, preferred securities have scored well on both fronts, credit quality and coupons. But certain preferred securities may have yet another potential source of value, called Qualified Dividend Income treatment or QDI.