All about Dividends

Perisher

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After many years here, one of the most basic repeated questions has always been about dividends. As such, I will summarise the key points here that any beginner can refer to regarding dividends.
I would be using layman terms for the most part so beginners can easily understand.

A) Dividends are a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Simply, dividends are what the company pays you for holding their stocks.

B) Dividends are not compulsory. It is different from Reits' distribution but the difference isn't gonna mean much to a layman.

C) Dividends can be pay out yearly, quarterly, monthly or even randomly without a fixed schedule. Most company that has a culture of paying out dividends though, would adhere to a certain frequency. Commonly found in the US is a quarterly payout.

D) Dividends has many dates that will appear to confuse beginners. Just for simplicity's sake, the following are the more important ones to note...

1. Ex-Div, this means excluding dividends. It means if you buy a stock on this day, it excludes the latest dividend payout. Do not buy on this date if you want the dividends.

e.g. ex-div is July 27, buy on July 26 or anytime before that to get dividends
I repeat, buy before July 27 to get dividends.

2. Pay date or Date Paid/Payable, all means the same. It is the date where you will see the dividends in your bank account. The day you received the $$.

Every time a company pays dividends, the ex-div date decide who would get the dividends while the pay date decides when you receive it.

3. CD or Cum-Dividend, it's not important. It basically means including dividends but it might confuse you as a beginner. Go wiki if you really need to know. Just don't bother if it's confusing you.

4. Record date, means nothing to you as a beginner. Don't bother. Go wiki if you really need to know. Just don't bother if it's confusing you.

E) Selling, if your sole purpose is to get dividends and you wish to sell the minute you are confirmed that you are entitled to a dividend, sell on ex-div date. How this works is, e.g. ex-div date is August 15, you want to get the dividends, you buy on August 14, hold it to August 15, sell it on August 15, ta-da, you have the dividends. Yes, holding it for a day is all it took.

Note that, it's a zero-sum game usually to try this method as the Stock would gap down(meaning move down) to show the pay out of the dividends.
E.g.
if ex-div is on February 12,
the stock price is $10 on Feb 11,
the dividends is $1,
The stock would most likely open at around $9 on Feb 12, thus taking into account the $1 dividend that is paid out.

So if you buy on feb 11 the stock would be $10. On feb 12, the stock would be $9, and you will be entitled to a $1 dividend.
The above is the usual case but there are exceptions where the stock swings back up immediately to the price pre-exdiv or $10 in this case. But the fall is nearly always gonna happen.

F) Also, dividends stocks in SG are not taxable. You will receive whatever amount is declared to be the dividends paid out. The tax is already done at the corporate stage, don't need to worry about it.

G) Another thing is dividends cash/shares options. A company can choose to pay you either with dividends shares or cash($), both the shares and the cash should come to about the same value though sometimes there might be a discount given for taking shares.

OCBC recently gives out discounted shares, i.e. their stock price per share is for example $10.30, they give you shares for $9.70.
That means if you are suppose to receive $19.40 in dividends, you will get to receive 2 shares of OCBC if you pick to take shares instead of dividends cash. You cannot choose both. Also, if your dividend cash has any left over, e.g. if you recevied $20 dividends and you choose shares, you will get 2 shares and $0.60 cash back into your bank account. I'm not sure about this but will update when someone can clarify.
edit: ok, scb will round down any odd shares so it's best to choose cash. As for shares round up/down, it still depends on the individual counters, always check before subscribing to shares or you might lose the leftover cash.

H) to find the dividend dates, refer to sgx.com, move your cursor to Company Information(the 2nd blue bar at the top), choose Corporate Action from the drop down list, and you will see all the dates for the dividends.
If you need to find a particular company's dividends, use the 'Company Name:' to find it.

I) Special dividends, these are dividends that are on top of the usual payout you see from the company, it is usually a 1 time thing and should be treated as a bonus.

J) Rights and other offers, this you will need to wiki.

Hope the above clears up most doubts people have with regards to dividends. Feel free to correct any mistakes you see and I will update this post.
 
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Perisher

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Anyone knows how to make this a sticky?
 

cesc-ark

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good info thanks,

why no one say in before don be so hard up over dividend =:p=:p=:p
 

lzr1984

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One thing i abit don't understand about dividend.
Why people care so much about dividend??
Like give u 0.1, share price also will drop 0.1, any difference selling b4 and after?
Sorry about this stupid question, still newbie~~
 

Applebonkers

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One thing i abit don't understand about dividend.
Why people care so much about dividend??
Like give u 0.1, share price also will drop 0.1, any difference selling b4 and after?
Sorry about this stupid question, still newbie~~

Correct me if I'm wrong.

1. Dividend share will provide good long term returns. The keyword here is LONG TERM. Normally I would buy blue chips for dividend since their prices are not that volatile. The dividend acts as a source of regular income which provides more $$$ than other low-risk 'investment' like FD. If you want short term returns and IF you are good enough, go for those pennies.

2. Stocks with high dividends attract investors and this potentially adding to the increase of the stock price over time.
 
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:o
Finally a summary of it.

I asked before here ,

last time I use to " xiao " dividend now think back have to see one.

if the stock price cheong quite high I rather sell it than hold for dividend.

maybe you all got your way of trading mind to share?

or same like me.
 
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One thing i abit don't understand about dividend.
Why people care so much about dividend??
Like give u 0.1, share price also will drop 0.1, any difference selling b4 and after?
Sorry about this stupid question, still newbie~~

xiao xiao one depend the company.

like comfort and SS their dividend " not bad "

whereas some I shock give a bit yet their stock price is not consider cheap.

i don't mind bank stock , etc of course their price is high initial .

I mean " some companies ".
 

wahkao3

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When invest in stock market, why are people so hard up over dividends?

That day I discussion stock market with friend, they say they look at dividends first. No dividend no talk. even my finance trained friend also say he look at dividend first. I hear him say this buei ta han dunno what he thinking.

I was thinking, dividends dont matter. The idea of receiving dividends every year sounds nice, but if you think carefully, its just left pocket right pocket. When you receive dividends, the share price will drop together with the dividend.

In fact, having no dividend is better because you are in control of when you receive your dividend.

Shouldnt other valuation ratios be more important?

So really, why are people so hard up over dividends when they invest?


no offense to dividend warrior, just trying to have healthy debate so everyone become wiser. I know dividend warrior subscribe to the idea of dividend + growth. I dont agree with dividend, but I agree with growth.

dividend.jpg


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the returns you get when choosing high dividend stocks vs low dividend stocks. there is NOTABLE NO DIFFERENCE!

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Sing Inv SING INVESTMENTS & FINANCE LTD
JcBlPkY.png


Look at this company
Do rights issue. Then after that do dividend issue.
How dumb is that? Give you a Drumstruck , then take away the whole chicken

This type of company must avoid because they are doing stupid things

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High Dividend stocks - Good or bad? Buy liao can huat big big?

I see buying dividend stock seems to be very in. Buy liao every year company give you money. Shiok shiok.

Is it really good or bad? Dividend give you liao the price will automatically devalue. End up also back to square one mah? Left pocket right pocket.

Why is it when come to investing, people think of dividend as 1 of the top priority? Is it the right way of investing? :s11:

Preferably Please dont say something generic like "depend on strategy". Break it down into its nuts and bolts in terms of risk reward liquidity returns etc
 

hhhnnn

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If u are interested in a company, will u buy before or after it issues dividend? any difference in terms of strategy and mentality and why?
Thanks
:)
 

backsight

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If u are interested in a company, will u buy before or after it issues dividend? any difference in terms of strategy and mentality and why?
Thanks
:)
if the company is good you can get dividends, as well as capital gain. so buying for dividends is not totally useless.
 

limster

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If u are interested in a company, will u buy before or after it issues dividend? any difference in terms of strategy and mentality and why?
Thanks
:)

You will buy the shares because you believe that the price will go up? Isn't that more important than buying CD or XD?

Maybe you need to check out the "what investing book for beginner to read" thread?
 

backsight

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you can buy into good companies eg blue chips that pay consistent dividends. unless you have no full time job, otherwise, you can put a certain amount of your income into these dividends machines and earn passive income. Not forgetting you can reinvest these dividends you get on top of your accumulation of the stock. Using the dividend approach is not totally useless like some might say.
 

GiraffeValue

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Why retail investors love dividend?

1. They are simply just ignorant about the effect of "right pocket in and left pocket out"
2. Good for bar's talk. Just image 1 guy speak out loudly "You know my dividend is enough to cover my Drinking expenses" and everyone with the looks of admiration. However he makes no reference to the total return @_@
3. Statically, dividend paying stocks outperform no or low dividend paying stocks. However most people understand it with the WRONG reason.

It is not the dividend that come in the form of Income that give you the better return. It is because of the re-investment of dividend collected that offer greater total return in portfolio perspective.
 

havetheveryfun

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In fact, having no dividend is better because you are in control of when you receive your dividend.

yes and take a loss in commission when you sell stocks which has potential to grow in the long term.

if you want to hold a stock for 10-20 years, you cant really do that.

e.g if ST engineering give 0% dividends, and you bought it when it is $1.00. Now ST engineering is $3.50 and you think it still has potential in the long term. You don't really want to sell and want to keep it for the long term, so the only way you can do is to sell a partial part of it and then lose a bit of $$$ to commission.

But if ST engineering gave 5% dividends instead, you wouldn't have to worry about all this, and can either choose to keep the dividends or to reinvest back into the stock.

so I will continue to be hard up over dividends, but of course dividends should not be the only thing people look at.
 
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