Dividend Yield

xen88 · 5 March 2020

If a share has dividend yield at 6% & you have $10k of shares. Does this mean you will get 6% x 10k?
Also, What if you sell your share after the ex date will you get the portion of the yield?

HelloU · 5 March 2020

Broadly
yep to the 1st bit about 6% (but div% quotes in the media and stuff are often done using last paid div and current share price) so you need to make allowances for what the next div % might actually be (up or down).

The ex day is the cut-off for ownership to get the div.. if you buy on the ex day (or after that day) then you get nothing until the next divdend comes around (usually 6 months). On the ex day the share price will usually drop by about the same $$ as the dividend amount.

Also, the div often comes with a franking $$ amount of extra money is classed as part of you annual income.... additional to what is usually quoted in the 6% figure unless that 6% is specifically written as grossed up dividend...........that extra franking credit money goes to the tax office in your name (rather than into your bank account) and it gets sorted out at tax return time (you either get some back or pay extra depending on your tax % rate compared to the franking % rate)

Hope that answers some of those questions.

kenny · 5 March 2020

One point on franking. In case you were thinking about dividend stripping where you buy for the dividend and sell the shares soon after ex-div date. The ATO has a 45 day holding rule to comply with in order to qualify for the franking credits. More here;
https://www.ato.gov.au/Forms/You-and-your-shares-2019/?page=10

kenny · 5 March 2020

Also the stated historical yield is for the last year's total dividend which may be unevenly split between half year and end of year distributions.

Zaxon · 6 March 2020

kenny said:
In case you were thinking about dividend stripping where you buy for the dividend and sell the shares soon after ex-div date. The ATO has a 45 day holding rule to comply with in order to qualify for the franking credits.

However, that doesn't apply if you're eligible for the small shareholder exemption - you receive less than $5k in franking credits.

Frankieplus · 10 March 2020

xen88 said:
If a share has dividend yield at 6% & you have $10k of shares. Does this mean you will get 6% x 10k?
Also, What if you sell your share after the ex date will you get the portion of the yield?

Someone correct me here,

If you buy $10k worth of shares then you bought a number of shares for that price and it's the number of shares you get paid dividends on isn't it?

Example, you buy $10k of CBA shares and you receive 136 shares. You get paid a dividend on each of those shares..

So if CBA pay lets say, a $1 dividend then you get $136. Which of course is a percentage of your original $10k purchase but I don't think it's calculated how you said in your original post.

I could be wrong here but I understood it to be how I just explained it.

-Frank

jbocker · 11 March 2020

Frankieplus said:
Someone correct me here,

If you buy $10k worth of shares then you bought a number of shares for that price and it's the number of shares you get paid dividends on isn't it?

Example, you buy $10k of CBA shares and you receive 136 shares. You get paid a dividend on each of those shares..

So if CBA pay lets say, a $1 dividend then you get $136. Which of course is a percentage of your original $10k purchase but I don't think it's calculated how you said in your original post.

I could be wrong here but I understood it to be how I just explained it.

-Frank

You will need to add the next half yearly dividend too, by my reckoning to get the real yield.

xen88 · 15 April 2020

Tha

HelloU said:
Broadly
yep to the 1st bit about 6% (but div% quotes in the media and stuff are often done using last paid div and current share price) so you need to make allowances for what the next div % might actually be (up or down).

The ex day is the cut-off for ownership to get the div.. if you buy on the ex day (or after that day) then you get nothing until the next divdend comes around (usually 6 months). On the ex day the share price will usually drop by about the same $$ as the dividend amount.

Also, the div often comes with a franking $$ amount of extra money is classed as part of you annual income.... additional to what is usually quoted in the 6% figure unless that 6% is specifically written as grossed up dividend...........that extra franking credit money goes to the tax office in your name (rather than into your bank account) and it gets sorted out at tax return time (you either get some back or pay extra depending on your tax % rate compared to the franking % rate)

Hope that answers some of those questions.

That means the dividend yield % showing on the ComSec App is not correct as it can go up or down? What about the tax adjustment rate, do you times that after you do dividend yield % x how many shares you have?

qldfrog · 15 April 2020

xen88 said:
Tha

That means the dividend yield % showing on the ComSec App is not correct as it can go up or down? What about the tax adjustment rate, do you times that after you do dividend yield % x how many shares you have?

Correct me if I'm wrong but i i lieve the yield displayed is the annual return..but yes it can be slashed anytime like suppressing dividend based on changed revenue etc..this is not a term deposit

HelloU · 15 April 2020

xen88 said:
Tha

That means the dividend yield % showing on the ComSec App is not correct as it can go up or down? What about the tax adjustment rate, do you times that after you do dividend yield % x how many shares you have?

I am not totally sure what your tax question is but the "displayed" % yield is based on previous dividend values. It does NOT include franking credits (so if you can make use of these then your calculated Return % will INCREASE).

If you are asking about franking, then most franking credits are pro-rata at +$30 for every $70 of dividend paid to your bank account, but previous history should be used as a guide (if so, divide expected dividend $$ by 0.4286 to get the additional expected franking $$).

The TRUE franking % is unknown until the dividend is actually announced.

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