(NZT) (TMX) Buying some cheap telecoms - Telmex and Telecom New Zealand
In this world of a falling dollar I can't help but pick up some high dividend paying low valuation stable earnings oriented telecom companies. I added to my position in Telecom New Zealand (NZT) and I bought back the May 20 strike calls sold agains my small Telmex (TMX) position.
Note regarding dividends paid by foreign corporations: Both of these stocks are American Depository Receipts and represent shares issued by non-US corporations. Dividends on these companies are taxed at the regular income rate not the special 15% rate for US corporations.
Disclosure:
I own Telecom New Zealand (NZT) and Telmex (TMX). I am also short jan 2007 - 15 strike puts on TMX. (I'd be very happy to own it at that price.)
I think this may be an even better deal...
Dividends on foreign equities that trade in the US (like adrs) and pay dividends out of profits which you hold for 60 days before and after the ex-dividend date DO qualify for the special 15% tax rate. See this link: http://www.associatedcontent.com/article/20654/do_adrs_qualify_for_the_special_tax.html
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I went to the IRS site on Qualified Foreign Dividends and it would seem you are right. Now my question is how do I get my brokers to stop reporting these dividends as non-qualified when it seems the IRS would considered them qualified.
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