Are there any tax implications for investors holding the Series A, B, and C preferred shares after the Q3 2025 dividend distribution?
Tax considerations
All three series — A (8.125 %), B (8.000 %) and C (6.750 %) — pay cash dividends that are treated as ordinary‑income‑type dividend payments for tax purposes. Because these are preferred‑share dividends (not qualified corporate dividends), the IRS taxes them at the investor’s regular marginal income‑tax rate rather than the lower qualified‑dividend rate. The amounts will be reported on the 1099‑DIV you receive from your broker and must be entered on Schedule B (or Schedule D if you have a capital‑gain/loss position) of your individual return.
If the shares are held in a tax‑advantaged account (e.g., a traditional IRA, Roth IRA, or a 401(k) plan), the dividend is generally tax‑deferred (or tax‑free in a Roth) and you do not need to report it now. In a taxable brokerage account, however, you should be prepared for ordinary‑income tax on the full dividend amount, plus any applicable state tax. For high‑income investors, the 3.8 % Net Investment Income Tax (NIIT) may also apply to the dividend income.
Actionable insight
- Plan for ordinary‑income tax on the Q3 2025 dividend if the shares sit in a taxable account; set aside roughly 30 % of the cash dividend (or your marginal rate) for federal and state liabilities.
- Review your holding location: If you can move the preferred shares into an IRA or other tax‑deferral vehicle before the ex‑dividend date, you can shelter the dividend from current‑year tax.
- Check your 1099‑DIV when it arrives (usually late January/early February) and ensure the dividend is correctly classified as “non‑qualified” to avoid mis‑reporting.
Overall, the dividend payout does not change the fundamental outlook for the series, but the tax‑drag on the cash return can materially affect net yield for taxable investors, so incorporate the expected ordinary‑income tax cost into your total‑return calculations and position sizing.