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Qualified stock dividends are taxed at a special capital gains rate. Unqualified dividends are taxed at the recipient's regular rate. See http://www.dividend.com/dividend-education/qualified-vs-unqu....

Curt - perhaps I could have written out explicitly "you still have to pay yourself a salary" but that was what I was trying to infer with my comment of "...because you are now an employee of the S corp..." I see you are also in Oregon, you might have better local advice for the parent poster. At a minimum, since you are both local to Portland you should meet up for a beer. ;-)

They are technically called distributions, not dividends, for the reasons you mentioned.