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Perisher 29-05-2015 10:31 PM

All about Dividends
 
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.

Perisher 29-05-2015 10:54 PM

Anyone knows how to make this a sticky?

MrSinkie95 29-05-2015 10:57 PM

got to ask admin to make it..

a1v1n_ 29-05-2015 11:54 PM

Thumbs up bro! Thanks!

Sent from ME using GAGT

guiltysky 29-05-2015 11:57 PM

Thumb up for good thread!

mrclubbie 30-05-2015 07:01 AM

Quote:

Originally Posted by Perisher (Post 94167160)
Anyone knows how to make this a sticky?

PM the moderator (YellowFin)

jiewei 30-05-2015 07:26 AM

Thanks for sharing

Sent from OnePlus A0001 using GAGT

cesc-ark 30-05-2015 07:45 AM

good info thanks,

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

backsight 30-05-2015 09:01 AM

Quote:

Originally Posted by Perisher (Post 94166694)

3. 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.

thought must hold till the record date to be entitled?

lzr1984 30-05-2015 10:27 AM

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 30-05-2015 11:01 AM

Quote:

Originally Posted by lzr1984 (Post 94172787)
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.

[[ForeverAlone]] 30-05-2015 11:03 AM

: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.

[[ForeverAlone]] 30-05-2015 11:05 AM

Quote:

Originally Posted by lzr1984 (Post 94172787)
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 30-05-2015 11:58 AM

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.

http://2.bp.blogspot.com/-A13pRB3htn...0/dividend.jpg

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

-------------------------
Sing Inv SING INVESTMENTS & FINANCE LTD
http://i.imgur.com/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

--------------------------

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 30-05-2015 12:43 PM

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
:)


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