Dividend Investing Glossary

A trading approach using options that expire the same day (zero days to expiration), allowing funds to capture daily premium income with reduced assignment risk.

Financial assistance provided by the Affordable Care Act (ACA) to help lower-income individuals and families pay for health insurance premiums.

A publicly traded company that provides financing to small and mid-sized businesses, required to distribute 90% of income to shareholders as dividends.

The process where an investment's earnings are reinvested to generate additional earnings over time.

An ETF that generates income by owning stocks and selling call options against those positions, trading potential upside for premium income.

Distribution rate measures recent cash payouts as a percentage of price, while SEC yield measures actual investment income earned - a critical distinction for income investors.

S&P 500 companies that have increased their dividend every year for at least 25 consecutive years, representing the gold standard of dividend reliability.

A trading strategy of buying stocks just before ex-dividend date and selling shortly after to collect the dividend, though share price drops often negate gains.

The annualized percentage increase in a company's dividend over time, a key metric for predicting future income and identifying quality dividend stocks.

A program that automatically uses dividend payments to purchase additional shares, enabling compound growth without manual intervention or transaction fees.

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

The first day a stock trades without its upcoming dividend - you must own shares before this date to receive the payment.

Two flagship JPMorgan income ETFs - JEPI focuses on defensive S&P 500 stocks with lower volatility, while JEPQ targets higher-growth Nasdaq 100 stocks.

Monthly dividend payers provide 12 payments per year for steady cash flow, while quarterly payers (more common) distribute four larger payments annually.

The gradual decline in an ETF's net asset value over time, often caused by distributing more income than the fund earns through capital appreciation.

Income generated from selling options contracts, where the seller collects upfront payment (premium) in exchange for taking on obligation to buy or sell shares.

The percentage of a company's earnings paid out as dividends, a key indicator of dividend sustainability and future growth potential.

The process of selecting and weighting various assets to create a balanced portfolio that meets an investor's risk and return objectives.

The process of realigning the weightings of assets in a portfolio by buying or selling assets to maintain a desired level of risk and return.

Qualified dividends are taxed at lower capital gains rates (0-20%), while ordinary dividends are taxed at your regular income rate (up to 37%).

A company that owns, operates, or finances income-producing real estate across a range of property sectors.

REIT dividends are typically taxed as ordinary income, but the 199A deduction allows individuals to exclude 20% of qualified REIT dividends from taxable income.

A distribution type that returns your own invested principal rather than investment earnings - tax-deferred but reduces your cost basis.

A metric that evaluates dividend yield relative to the investment's risk level, helping investors compare income opportunities on an equal footing.

The Schwab U.S. Dividend Equity ETF's methodology of screening for high-quality dividend stocks using fundamentals like cash flow, ROE, and dividend growth.

The risk that the order and timing of investment returns will negatively impact the total value of an account, especially dangerous for retirees starting withdrawals.

The strategic decision of when to claim Social Security benefits (between age 62 and 70) to maximize lifetime income and survivor benefits.

A strategy using derivatives to replicate covered call exposure without owning the underlying stock, commonly used by high-yield ETFs to generate income.

The practice of arranging your investments across different account types (Taxable, IRA, Roth) to minmize your overall tax burden.

The strategy of selling an investment that has a capital loss to offset a capital gains tax liability.

The actual rate of return of an investment over a given evaluation period, including interest, capital gains, and dividends.

Your dividend yield based on the price you originally paid for the investment, highlighting the power of long-term dividend growth.

A family of ultra-high-yield ETFs that sell options on single stocks like Tesla and Nvidia, offering 30-80%+ yields with significant NAV erosion risk.