BDC and Mortgage REIT Income Is Taxed Differently Than a Bank Dividend. Here's Where to Hold Each.

Dividend taxation can differ sharply between investment types, especially for mortgage real estate investment trusts (REITs) and business development companies (BDCs). REITs and BDCs are structured to pass at least 90% of their taxable income to shareholders as dividends, which helps them avoid corporate income tax at the company level. Investors generally then pay taxes on that dividend income at their normal earned-income rate. The article contrasts this with how bank dividends are handled and includes examples such as AGNC’s roughly 13.5% yield, NLY around 12.5%, MAIN about 5.5% (near 7.5% including special dividends), and ARCC near 9.5%.