Are Capital Gains Distributions Considered Dividends

Investors must evaluate the total return yield and CGY of an investment. A CGY evaluation does not include dividends; however, depending on the stock, dividends may include a considerable part of the total return in comparison to capital gains. ... However, if a stock decreases in value, it is a capital loss.Short-term capital gains distributions are taxed at the shareholder's ordinary income tax rate. ... Taxpayers in the two lowest brackets, 10% and 15%, pay no long-term gains tax. Most others pay a 15% capital gains tax with the exception of those in the highest tax bracket, who pay a 20% tax on long-term gains.Dividends and distributions often appear the same from the recipient's perspective. Dividends may or may not involve cash. For tax purposes, companies derive them from a share of their income. In contrast, distributions always come in the form of cash payouts.A capital gain distribution is when the mutual fund, or ETF, has sold assets and now has capital gains. They then pass the gains onto the investors. These gains are either paid directly to the investors, or are used to purchase additional shares and those are credited to the investors accounts.