MYI: A Tax-Efficient Income Play for High-Income Investors

MYI, a U.S.-based corporation, has positioned itself as a compelling income opportunity for higher-rate taxpayers in 2025, offering a dividend yield of 3.8% as of Q3 2025—a notable 0.3% increase from Q2. This rise, driven by improved profitability and strategic financial management, aligns with forecasts suggesting further growth. For investors in the top tax brackets, MYI’s dividends present a rare blend of attractive income and tax efficiency, provided certain criteria are met.

The Dividend Advantage

MYI’s 3.8% yield in Q3 2025 outperformed its initial 2025 forecast of 3.7%, signaling confidence in its earnings trajectory. This yield places it above many traditional income vehicles, such as bonds or CDs, making it particularly appealing to retirees or high-income earners seeking steady cash flow. The dividend’s qualification for favorable tax treatment further amplifies its appeal.

Tax Efficiency for High-Income Earners

For qualified dividends, the top federal tax rate is 20%, significantly lower than the 37% marginal ordinary income tax rate for those earning over $626,350 (single filers) or $680,750 (married filers) in 2025. To qualify, MYI’s dividends must meet two key IRS requirements:
1. Source: MYI must be a U.S. corporation (which it is) or a qualified foreign corporation.
2. Holding Period: Investors must hold shares for more than 60 days within the 121-day window before the ex-dividend date.

Even with the 3.8% Net Investment Income Tax (NIIT) applying to taxpayers with modified adjusted gross income (MAGI) exceeding $200,000 ($250,000 for married couples), the total tax burden on qualified dividends remains far lower than ordinary income. For example, a single filer earning $500,000 would pay 23.8% (20% + 3.8%) on MYI dividends versus 37% on equivalent ordinary income.

Navigating the Holding Period

To qualify, investors must track MYI’s ex-dividend dates and ensure compliance with the holding period. For instance, if MYI’s next ex-dividend date is January 15, 2025, shares must be held for at least 61 days between November 16, 2024 (60 days prior), and April 24, 2025 (the full 121-day window). Failing this requirement reclassifies dividends as ordinary income, negating tax savings.

Considerations and Risks

• Tax Reporting: All dividends, including reinvested shares, must be reported on Form 1099-DIV. Qualified dividends appear in Box 1b, while ordinary income dividends are listed in Box 1a.
• Market Risk: Like all equities, MYI’s stock price fluctuates. A drop in share value could erode total returns.
• Dividend Cuts: While MYI’s recent yield growth is encouraging, dividend policies can change with corporate performance.

Strategic Recommendations

• Tax-Aware Holding: Use taxable accounts for MYI to maximize qualified dividend benefits, while sheltering growth stocks in tax-deferred accounts.
• Timing Buys/Sells: Avoid transactions around ex-dividend dates to preserve qualified status.
• Diversification: Pair MYI with other high-yield, tax-efficient assets (e.g., real estate investment trusts with ordinary income) to balance risk and tax exposure.

Conclusion

MYI’s 3.8% dividend yield, coupled with its qualification for the 20% top capital gains rate, makes it a standout income option for high-rate taxpayers in 2025. With its yield surpassing initial forecasts and tax efficiency solidifying its edge over ordinary income sources, MYI offers a compelling risk-reward profile. However, success hinges on meticulous tracking of holding periods and ex-dividend dates. For investors willing to engage in disciplined tax planning, MYI could deliver both steady cash flow and significant tax savings—a rare combination in today’s market.

In a year where income generation faces headwinds, MYI’s blend of yield and tax efficiency positions it as a cornerstone holding for high-income portfolios—if navigated wisely.