A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares. Dividends are typically distributed from a company's profits and are a way for companies to share their earnings with investors. They are often paid on a regular basis, such as quarterly or annually.

In taxable accounts, these distributions are subject to tax, while in IRAs or 401(k)s, taxation is deferred until withdrawal. All distributions/withdrawals from these accounts are taxed as ordinary income, whether they are principal, capital appreciation, or dividends.

The yield should be included in your total return in a Capital Gains account — your Rate of Return already includes the dividend, and the Dividend Yield field simply tells Boldin how much of that return comes from dividends.

For example, say your total average annual return is 6%, made up of 4% capital appreciation and 2% dividend yield:

By default, dividends will be reinvested, which will increase the balance and the cost basis of the account in your plan projections. They will also be assumed to be qualified dividends, meaning any associated capital gains tax will be included in your capital gains tax modeling each year as per IRS regulations.

Dividends entered as a dividend yield in a Capital Gains account are also integrated into several other Boldin tools. In the Roth Conversion Explorer, they're treated as qualified dividends and incorporated into the capital gains tax modeling. They display as Dividends on the Insights > Savings > Contributions and Investment Returns chart, and as Realized Gains on the Gross Taxable Income by Source chart.

If your dividends are non-qualified (ordinary) — common with money market funds, most bond funds, and some REITs — the correct election is an Investment account with Ordinary Income tax treatment. Held there, those distributions are taxed at your ordinary income rate each year, which is how non-qualified dividends are actually taxed.

One thing to note: Ordinary Income accounts don't have a separate dividend yield field. Instead, the full rate of return you enter is taxed as ordinary income annually — so for a non-qualified dividend payer, include the dividend yield in the account's rate of return. There's no separate field to complete, and that's expected.

Because they're taxed as ordinary income each year, non-qualified dividends appear as ordinary income rather than as realized gains on your charts.

If one brokerage account holds both — qualified payers (stocks, stock ETFs) and non-qualified payers (bonds, money market) — separate it into two accounts: one Investment (Capital Gains) and one Investment (Ordinary Income). See How do I add a Taxable Account? for setup steps.