• Federated Hermes outlined a tax-sensitive portfolio approach that blends municipal bonds with qualified dividend equities to lift after-tax income for high-bracket investors while keeping exposure to equity upside.
• The analysis highlighted federal tax advantages for municipals and qualified dividend income, using an illustration that showed investors retaining about $0.90 per $1 of pretax income in a 60% muni, 40% qualified dividend stock mix versus $0.76 for a 100% dividend stock portfolio or $0.59 for a 100% taxable bond portfolio.
• It also cited historically low correlation between munis and equities, positioning the mix as a way to reduce portfolio volatility and limit drawdowns relative to pure equity allocations, with 2022 flagged as a notable exception.
• The report pointed to tax-loss harvesting as a key lever, with losses in one sleeve potentially offsetting taxable gains elsewhere in the account, including gains from municipal security sales.
• For pooled vehicles, it said maintaining a tax-advantaged pass-through profile typically requires a majority allocation to municipal securities.

Disclaimer: This news brief was created by Public Technologies (PUBT) using generative artificial intelligence. While PUBT strives to provide accurate and timely information, this AI-generated content is for informational purposes only and should not be interpreted as financial, investment, or legal advice. Federated Hermes Inc. published the original content used to generate this news brief on May 20, 2026, and is solely responsible for the information contained therein.