Questions tagged [dividends]

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208
votes
21answers
86k views

If a stock doesn't pay dividends, then why is the stock worth anything?

I read somewhere that companies are not required to pay dividends to shareholders (this is correct, yes?). If so, then if company A never pays dividends to its shareholders, then what is the point ...
80
votes
11answers
22k views

Why does a company pay dividends at all?

If a company can lower the dividends and even stop paying them at all during hard times, why would they re-install them at all? If I understand correctly a company pays dividends so that investors ...
50
votes
11answers
25k views

Why do people buy stocks that pay no dividend?

Before recently, Apple Inc. did not give dividend to shareholders. This makes me curious why people buy Apple Inc. stocks; while it might be due to the expectation of selling stocks at a higher price,...
47
votes
9answers
59k views

If stock price drops by the amount of dividend paid, what is the use of a dividend

I have heard that some people buy stocks based on how much dividend they pay, because dividend is considered 'income'. But if I buy a stock for 100$ and it pays a $1 dividend, the stock would also ...
38
votes
7answers
11k views

Why is it rational to pay out a dividend?

Imagine a mature company, which has stable earnings and made a profit this year. The company is planing to pay out a part of this earnings to its shareholders. Assuming the stock price goes down ...
38
votes
3answers
11k views

In USA, can I set up a one-person corporation and pay myself mainly through dividends?

In the UK an IT-contractor can save in taxes by opening a company, paying themselves a minimum wage as a salary and then taking a larger amount of income as dividends. Is this possible (for a single-...
37
votes
9answers
18k views

Is it legal to “mine” dividends?

Dividends are paid to share holders based on ownership of shares before the “ex-dividends” date. Example: Stock A has an ex-date of July 1st Stock B has an ex-date of July 15th Stock C has an ex-date ...
33
votes
1answer
4k views

Dividend Payments - Am I entitled?

Suppose I own 100 stocks in a company listed on the LSE. I purchased these shares through an online broker some time around the 1st of November 2016. Looking up the dividend dates of the company using ...
28
votes
9answers
7k views

Why are dividends different from property income like rent?

My question should be more like: why dividends are inseparable from the appreciation of a stock's price? The common explanation is something like: Stock A pays a $10 (10%) dividend and a share is ...
26
votes
7answers
8k views

What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out?

What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? I guess I am confused: If you know the yield and when the dividend will be paid out, why ...
24
votes
3answers
6k views

If a company that doesn't pay dividends makes a large profit, where does it go?

Does the company have a responsibility to reinvest all of it? Can a company have a lot of money just sitting around? Is that grounds for shareholders to sue? If a company has a lot of money just ...
24
votes
5answers
6k views

Dividends - Why the push to reinvest?

I recently received an email from my brokerage (UK based) stating: "Research from Barclays shows that without dividends, £100 invested in the UK stock market since 1899 would have grown into just £...
23
votes
14answers
8k views

Why do people always talk about stocks that pay high dividends?

Isn't it true that on the ex-dividend date, the price of the stock goes down roughly the amount of the dividend? That is, what you gain in dividend, you lose in price drop. (Of course, sometimes it ...
22
votes
5answers
20k views

Do stock prices drop due to dividends?

From Personal Finance for Dummies, page 209: Dividends Dividends are income paid by investments. Both bond funds and stocks can pay dividends. Bond fund dividends (the interest paid by the ...
19
votes
5answers
5k views

Why do companies pay fixed dividends instead of fluid ones?

For example, as of time of writing, Microsoft pays a dividend of $2.04 per share per year. Why would Microsoft (and every company I've looked at) pay a fixed dividend instead of one indexed to their ...
19
votes
6answers
28k views

Please explain the relationship between dividend amount, stock price, and option value?

I consider myself a reasonably knowledgeable investor, but today was blown away by the fact that I didn't know that a stock's price is decreased by the amount of its dividend. To use a concrete ...
17
votes
3answers
29k views

How does dividend work in an index fund?

What does a manager do with the dividends of the companies in the index? Does he reinvest the dividends in the company in which he got the dividends or will just choose whichever company suits him? ...
17
votes
5answers
5k views

If your plan is to reinvest dividends, wouldn't you rather the company not pay dividends altogether?

Case 1: XYZ pays a dividend. We reinvest all dividends back into XYZ Case 2: XYZ does not pay a dividend In Case 1, you end up with more shares of XYZ than Case 2, but the shares will be worth less ...
17
votes
1answer
1k views

Should I pay myself a dividend or a salary?

I'm considering starting my own limited liability company in Germany (GmbH). However, I myself live currently most of the time in Spain (more than 183 days per tax year, the other time is business ...
16
votes
3answers
8k views

Can I get a dividend "free lunch" by buying a stock just before the ex-dividend date and selling it immediately after? [duplicate]

Many companies pays dividend to stock owners. Example: IBM pays dividend to registered stock owners. Owning the stock on dd:mm:yyyy hh:mm:ss will entitle you to dividend. Question: Is it possible ...
16
votes
9answers
3k views

Are ETF trackers fundamentally better than individual stocks?

My situation: I am mostly interested in long-term dividend-paying investments. My philosophy is "only sell if the company becomes fundamentally worse", so I only pick stocks of companies I feel ...
16
votes
2answers
33k views

How does Yahoo finance adjust stock data for splits and dividends?

When a data provider like Yahoo finance says that the closing price is adjusted for splits and dividends, what does that mean? A split will increase/ decrease the price by the split ratio, and a ...
16
votes
4answers
16k views

If I short-sell a dividend-paying stock, do I have to pay the dividend?

If I hold shares of a stock on the ex div date, I get a dividend. But if instead I were to short-sell the stock and not buy it back before that date, would I then be responsible for paying the ...
15
votes
7answers
4k views

If an investor does not need an income stream, do dividend stocks have advantages over non-dividend stocks?

My limited understanding is that a stock's share price typically goes down on its ex-dividend date by the amount of the dividend. If that's true, why are dividend equities generally considered good ...
15
votes
2answers
7k views

Can a company stop paying dividends?

I know that Apple, for example, began paying dividends in 2012. Can a company do the opposite, namely stop paying dividends suddenly?
14
votes
4answers
2k views

Should I buy stocks of my current employer because of its high dividend yield?

I have some cash in the bank I am ready to invest. My company has been profitable since 20 years and provides a generous dividend of roughly 8% per year. So I though buying some stocks could be a ...
14
votes
1answer
2k views

Are Roth IRA dividends taxable?

Are dividends from a 5+ year old established Roth IRA for a person over 70 1/2 tax free? I understand withdrawals of principal are tax free as they have already been taxed.
14
votes
5answers
613 views

Why would a company with a bad balance sheet be paying dividends?

As an example, Ford Motors recently reinstated its dividend. It still has a lot of debt and a high debt-equity ratio. Its bonds are still rated as junk. Why would a company like this spend its cash ...
14
votes
1answer
32k views

Do companies only pay dividends if they are in profit?

My understanding of dividends is that the company pays each shareholder a fixed amount of money per share they own. I can see how this would work if the company is in profit, because the company can ...
13
votes
1answer
3k views

Why does VOO pay less dividends than SPY?

I understand that the ETFs SPY and VOO were created at different times and that their payout dates are different and due to that, it is possible that the dividends may vary a little bit. In my logic ...
13
votes
3answers
8k views

Are there capital gains taxes or dividend taxes if I invest in the U.S. stock market from outside of the country?

Recently, I invested in some stock in the U.S. stock market. I was wondering: Whether there are capital gains taxes if I sell stock? Do they take account into my foreign exchange loss? Are there any ...
12
votes
3answers
4k views

Are dividends exclusively a part of earnings?

Are stock dividends exclusively part of earnings? Or are there cases when companies pay dividends despite zero or low earnings?
12
votes
3answers
3k views

Where can publicly traded profits go but to shareholders via dividends?

Some companies don't pay dividends. Some companies accumulate money like the offshore "exiled" or expatriated cash piles of the likes of Apple and friends. So I suppose that corporate profits can be ...
11
votes
2answers
1k views

Why don't all dividend-yielding companies offer dividend reinvestment plans (DRIPs)?

My uneducated guess is that dividend reinvestments seem to be a win-win situation between companies and shareholders. As a result, I wonder why some dividend-yielding companies do not offer dividend ...
11
votes
9answers
8k views

What gives non-dividend stocks value to purchasers? [duplicate]

This is a question that has bothered me for awhile about the fundmental nature of the stock market as a whole, and no one has given a satisfying explanation. What is root cause of a stock having ...
11
votes
1answer
2k views

Forgot to encash dividend Cheque!

My Mother holds shares in a public limited company [India], which announced it's interim dividend last year. Accordingly, they sent a cheque to her for her share of dividend, but she forgot to encash ...
11
votes
4answers
29k views

Difference between dividend and interest

A representative at my federal credit union used dividend and interest exchangeably in our communication, claiming the two were the same concept in their financial institution, which doesn't sell ...
11
votes
2answers
9k views

How do you determine the dividend payout date for Mutual Funds?

For stocks it seems to be easy to find dividend payment information. However, for mutual funds, like VDIGX, I am having an issue figuring out expected payout dates and frequency. Can someone point me ...
11
votes
4answers
1k views

What to do with small dividends in brokerage account?

I just got paid some dividends from an ETF that I own. It is only $4, which is sitting as cash in my brokerage account. I'm aware that this is a very tiny amount of money in the grand scheme of things,...
11
votes
1answer
9k views

Selling dividend securities in after-market hours: Who gets the dividend?

Consider this scenario: During normal market hours, you buy a security 1 day before the ex dividend date. You sell this security in after market trading that same day. Who gets the dividend, you or ...
10
votes
2answers
3k views

Save on taxes by paying oneself dividends instead of salary from a Canadian company

Shareholders of Canadian companies enjoy a so called dividend tax credit. Basically, this means a reduced rate of tax on the dividends paid by the company to the shareholder. That makes me think.......
10
votes
3answers
1k views

How does dividend payout happen?

Intel Corporation's board of directors has declared a quarterly dividend of 22.5 cents per share (90 cents per share on an annual basis) on the company's common stock. The dividend will be payable on ...
10
votes
5answers
2k views

Why is a stock that pays a dividend preferrable to one that doesn't?

I understand that a dividend is a way for a company to return money to shareholders. But I'm not quite understanding why it is preferable to capital appreciation and putting the money to work ...
10
votes
3answers
777 views

What ways are there to invest in stocks, options, indexes, etc, and where should one start (what funds)?

I have been poking around with investing for a few years now. I have diversified my assets a decent amount, between a home, several IRA's and 401k's, savings and checking accounts, and a little bit of ...
10
votes
3answers
297 views

Is it better for a public company to increase its dividends, or institute a share buyback?

When a company is profitable and generating substantial positive cash flow, is it better from the company's perspective to have a dividend increase, or institute a share repurchasing program? From an ...
10
votes
4answers
632 views

How do U.S. stock exchanges specifically account for dividends and ex-dividend dates?

At another question about ex-dividend dates and withholding taxes, an answer from Bob Baerker says: Stock exchanges reduce share price by the exact amount of the dividend on the ex-dividend date [...
10
votes
1answer
2k views

How exactly do dividend reinvestment plans (DRIPs) work?

And where can I find out what companies offer them? Are there good resources for information on these plans?
10
votes
2answers
3k views

Which US market indexes (Dow/DJIA, S&P500, NASDAQ) include reinvested dividends?

Which major US market indexes (Dow/DJIA, S&P 500, NASDAQ) include returns from reinvested dividends, and which don't? Where can "total return" information be found for each index that doesn't ...
10
votes
1answer
664 views

Does "cash in lieu of dividend" incur any tax consequences in an IRA?

My broker has a program that I can participate in which can lend out my fully-paid stocks for others to borrow (typically for shorting.) In exchange for my borrowed stock, they provide cash ...
9
votes
5answers
5k views

Borrowing money to buy shares for cashflow?

I currently have lots of equity in my house in Sydney. I am holding 2 investment properties that are negative and really draining my cash flow as we have young kids and wife only works part time. I ...

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