Are Dividends Income? (Part 1)

Today I begin an inquiry into whether dividends are income.

While I am skeptical (I believe you have to be in this business), I have no financial interest hinging on the outcome of this inquiry. I have currently categorized this under optionScam.com but I will re-categorize as I see fit. This is a good example of blogging to organize my thoughts about the financial industry.

Google “dividend income” and you will find numerous hits. At investopedia.com, part of the description includes the words:

      > Mutual funds pay out interest and dividend income received from
      > their portfolio holdings as dividends to fund shareholders.

I googled “what is income” and found:

      > Money received, especially on a regular basis, for work or through
      > investments. “He has a nice home and an adequate income.”

Dividends are received as part of the investing process, which makes the score 2-0 in favor of dividends as income.

I get hung up on the conventional meaning of income and I believe the latter example given is more typical of common usage. Most people work and earn income.

Accounting would probably recognize this as wage income, or “wages.”

The IRS also defines active income and passive income! Maybe I just need an accounting course or two to get to the bottom of this. Once again, from Investopedia, passive income is:

      > Earnings an individual derives from a ren​tal property, limited partnership
      > or other enterprise in which he or she is not materially involved.

That doesn’t sound like investment returns but if I read on:

      > Portfolio income is considered passive income by some analysts, in which
      > case dividends and interest would be considered passive [italics mine].

So maybe it is and maybe it isn’t passive income depending on who you ask?

It does seem to be some sort of income, though, so score it 3-0 thus far in favor of dividends as income. I will continue in the next post.