To qualify, the payer must be a US corporation or a qualifying foreign corporation, and the holder must own the shares for more than 60 days in the 121-day window centred on the ex-dividend-date. Days when risk was hedged, for example by a short call or a protective-put, do not count toward the holding period.
REIT distributions, money market interest, and payments on shares that are lent out through securities-lending generally do not qualify, which is a hidden cost of enabling a broker share-lending programme.
Example: $4,000 of qualified dividends taxed at 15% costs $600. The same $4,000 taxed as ordinary income at 35% costs $1,400, a difference of $800 created purely by the holding period.
Related: dividend-capture, ex-dividend-date