What are the tax implications for investors receiving this dividend, especially for foreign shareholders?

Tax considerations

Cardinal Health’s $0.5107 USD quarterly payout is a U.S.‑sourced cash dividend. For U.S.‑based investors the amount is fully taxable as ordinary income (or qualified dividend, if the share meets the holding‑period test) and will be reported on Form 1040.

For foreign shareholders the dividend is subject to a mandatory U.S. withholding tax of 30 % unless a lower treaty rate applies. Most EU, Canada, Australia, and many Asian treaties reduce the rate to 15 % (or even 0 % for certain pension‑type entities). The payer will deduct the appropriate amount at source and issue a Form 1042‑S to the non‑resident. Investors can claim a foreign‑tax credit in their home jurisdiction for the U.S. tax paid, subject to local rules, and may be able to request a reduced treaty rate by providing a valid W‑8BEN (or equivalent) to Cardinal Health’s transfer agent.

Trading implications

The dividend will generate a modest ex‑dividend price adjustment (≈$0.51) and a short‑term upside pressure as the market prices in the yield (≈2.1 % annualised on the current ~$24 share). The net after‑tax yield for foreign investors will be lower—e.g., a 15 % treaty rate leaves roughly $0.43 USD per share after tax, versus the pre‑tax $0.51 USD. Traders should therefore weigh the post‑tax return against the stock’s valuation (PE≈13× forward earnings) and its recent technical bias (trading near the 50‑day SMA, modest upside momentum).

Actionable insight

- U.S. investors: Hold the dividend in a tax‑advantaged account (IRA/401k) to avoid immediate tax drag, or factor the 30 % ordinary‑income tax into your expected return.

- Foreign investors: Verify your treaty eligibility, submit a W‑8BEN to secure the 15 % rate, and incorporate the reduced after‑tax yield into your position sizing. If the net yield is insufficient relative to alternative dividend‑paying peers, consider limiting exposure or using a covered‑call overlay to boost income while preserving capital.