What are Capital Gains and Income Dividends?

Question

I have a Mutual Fund (Roth IRA) and recently my account showed a Capital Gain and Income Dividend transaction. Can somebody please explain to me what a Capital Gain and Income Dividend is in regard to a mutual fund??? Thanks.

Answer 1

Mutual funds pay out two types of dividends. One is a income dividend, payable from the dividends it collects on the stocks in its portfolio. The second is a capital gain dividend, which is paid from the capital gains on the stocks it sells in its portfolio.

Answer 2

Gains u make on Selling ur Mutual funds is Capital Gains.
Annual income u derive out of ur holdings is Dividends.

Answer 3

A capital gain is usually the profit realized from the sale of a transaction. Same applies to a capital loss being the loss from the sale of a transaction. Both of these are calculated by taking what it cost to purchase vs. the price it sold for.

Dividend income is when a company you hold stock in pays out dividends to shareholders.

Answer 4

A capital gain is the amount of money you have made on the money you initially invested. So if you invested $2,000 to start and it's now worth $2,500, you have a $500 capital gain. Income dividend is when a company, whose stock you own, declares and pays a dividend to it's stockholder's. But, if it's a Roth IRA, all of it, both dividend and capital gain, is tax free, both state & federal.

Answer 5

capital gains is from when the fund sold companies at a profit and dividend income is the income recieved from the fund by the dividend yielding companies it owns stock in

Answer 6

Capital gain is the appreciation you get on your capital. Dividend income is part of the profit distributed by the company.

Answer 7

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