Dividend Investing Glossary

13 essential terms for dividend ETF investors.

• Covered Call - An options strategy where an investor holds a stock and sells call options against it to generate income.
• Ex-Dividend Date - The cutoff date for dividend eligibility; you must own shares before this date to receive the dividend.
• Qualified Dividend - Dividends that meet IRS requirements for lower capital gains tax rates.
• NAV Erosion - The gradual decline in a fund's net asset value over time.
• DRIP - Dividend Reinvestment Plan - automatically reinvesting dividends to purchase additional shares.
• Yield - The income return on an investment, expressed as a percentage.
• Option Premium - The price paid by the buyer to the seller for an options contract.
• Strike Price - The set price at which an option can be bought or sold when exercised.
• Distribution Rate - The annualized rate at which a fund distributes income to shareholders.
• Total Return - The complete return on an investment including price appreciation and dividends.
• Expense Ratio - The annual fee charged by an ETF, expressed as a percentage of assets.
• Record Date - The date on which you must be a registered shareholder to receive the dividend.
• Payment Date - The date on which the dividend is actually paid to shareholders.