👍 What is dividend?
Dividends and capital gains (trading gains) are the profits that can be obtained from stocks.
In this post, let's look at dividends among them.
Dividend refers to sharing the net profits earned by a company with shareholders.
It would be natural for investors to choose those with higher dividend yields (covered below).
However, since some countries have kept the company's profits in-house and used them as investments in order to achieve rapid growth, dividends have not been activated compared to foreign countries.
In addition, the tax is not beaten on trading gains, but dividends are hit at the same rate as the interest income tax rate, so it is difficult to pay attention to dividends in domestic stocks.
Still, in overseas investment, dividends are good, so you have to learn!
I also had an overseas refinery for only two weeks, but I made the money for Starbucks coffee haha
So let's start with terms related to dividends.
👍 Terms related to dividends
👊 Dividend payout ratio (dividend payment rate): How much dividend does this company pay?
First, by dividing the net income earned by a company by the total number of issued stocks, you can get the profit per share.
For example, if Electronics A made a net income of $100 million and issued a total of 10,000 shares, it would generate a profit of $10,000 per share.
Earnings per share is called EPS (Earning Per Share).
Dividend payout ratio refers to the percentage of EPS that will be paid as dividends.
If the EPS was 10,000, but the dividend payout ratio was 50%, it would pay half the dividend, so you can see that this company is a good dividend.
At this time, the dividend is $5,000, multiplied by the dividend payout ratio by EPS.
👊 Dividend yield: I bought this stock for x$ this time, but I made y$ with dividends lol I made y/x% profit with dividends!
Calculate the dividend yield from the investor's point of view.
Dividend yield = dividend ÷ current stock price (purchase price)
👊 Dividend rate: Our company gives this dividend compared to the initial par value! Give a lot? :)
It tells you how much dividends you pay from the corporate perspective compared to the par value per share.
Dividend rate = dividend ÷ par value
👍 Dividend procedure and schedule
Advance stock purchase -> ex-dividend date -> dividend base date -> dividend announcement date -> dividend payment date
👊 Ex-dividend date: The day when there is no right to receive dividends for the stock in order to determine who is eligible for dividend payment.
Dividend ex-date = previous business day of the dividend base date
👊 Dividend base date: Base date to determine the right to receive dividends
Dividend base date = Settlement date of each business year
👊 Dividend announcement date: The date on which matters related to dividend per share, dividend base date, and dividend payment date are announced.
👊 Dividend payment date: The day when dividends are actually paid to shareholders
Unless otherwise specified, payment must be made within one month from the resolution.
✅ One line summary
No matter how late, you must purchase stocks by the business day before the dividend base date in order to receive the company's dividend.