True, except most of it is return of capital. You only pay inc. tax on a fraction of the div. The rest lowers your cost basis, such that when you sell, you pay capital gains taxes. ie: Buy at 30, get 2 in dividends, new basis is 28. You sell at 30 and so made 2 in cap gains. So, dont sell for no reason! MLP's are buy and hold. If you trade, get out before ex-div dates.