Questions tagged [dividends]

This tag is to be used for any dividends related question. When appropriate it should be accompanied by country tag.

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231 votes
22 answers
92k 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 ...
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53 votes
11 answers
26k 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,...
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8 votes
1 answer
431 views

Question about ex-dividend date timing

For example, if the ex-dividend date is next Monday, and I buy the stock on next Monday, would I get the dividend? Or would the person who sold the stock to me get the dividend?
11 votes
5 answers
760 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 [...
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9 votes
4 answers
2k views

Does a stock really dip in price on the ex-dividend date? And why would it do this?

As per this Investopedia article: Because the stock price is expected to drop by the amount of the dividend on the ex-dividend date, Why is a stock expected to fall on the dividend date? Does it ...
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81 votes
11 answers
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 ...
  • 1,199
38 votes
7 answers
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 ...
  • 541
2 votes
1 answer
2k views

How does end-of-year interact with mutual fund prices (if it does)?

Should I expect prices of mutual fund shares to go up in anticipation of dividends, down after dividends have paid out ... or just trust that the market has already reacted to that and the price is ...
  • 32k
26 votes
7 answers
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 ...
  • 1,027
23 votes
5 answers
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 ...
10 votes
5 answers
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
1 answer
1k views

Determining the minimum dividend that should be paid from my S corporation

I am the sole shareholder and only employee of an S corporation. I understand that all profits of the corporation are passed through and taxed as income to me. I also understand that all dividends ...
2 votes
2 answers
378 views

Why is there more attention on the S&P 500 than on the S&P 500, inflation adjusted, with dividends?

Dividends, like increased stock price, are just another equivalent way for shareholders to gain value (with some tax differences). Many investors reinvest the dividends and so never "see" them. Of ...
1 vote
6 answers
997 views

Why do stock prices rise when dividends increase?

It seems like stock prices rise when dividends increase unexpectedly [possible citation needed]. This doesn't seem intuitive to me, because if you think of stock as a claim of ownership on a company, ...
1 vote
1 answer
214 views

Why do I get charged more than the depositary fees + withheld taxes on my American Depositary Receipt (ADR)?

I have 894 shares of AXAHY (which is an American depositary receipts (ADR)) on my Fidelity brokerage account. According to this answer by Flux, the depositary fees for AXAHY in 2020 are 0.04 USD per ...
23 votes
14 answers
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 ...
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17 votes
2 answers
36k 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 ...
  • 15.8k
15 votes
3 answers
9k 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 ...
47 votes
9 answers
60k 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 ...
  • 15.8k
37 votes
9 answers
18k views

Is it legal to “mine” dividends? [duplicate]

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 ...
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21 votes
6 answers
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 ...
  • 2,924
16 votes
3 answers
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 ...
  • 1,545
6 votes
4 answers
1k views

Are dividends an actual gain value?

Dividends from stock or funds are obviously considered to be an earnings benefit or a gain or a plus, but I'm wondering how that is monetarily computed? I know it is added to the gain income, but I ...
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9 votes
5 answers
6k views

Why is a stock dividend considered a dividend? What makes it different from a stock split?

I've been reading Principles of Corporate Finance by Brealey, Myers and Allen, but unfortunately they did not cover stock dividends. From what I understand, by paying a dividend, a company can ...
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14 votes
1 answer
33k 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 ...
10 votes
3 answers
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 ...
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5 votes
1 answer
2k views

Why do mutual funds and ETFs in the U.S. not capitalize dividends?

I am from Europe/Belgium and in Europe it is common to have funds and ETFs which capitalize/re-invest instead of distribute the dividends. I have been looking to the Vanguard ETFs and funds lately, ...
2 votes
2 answers
4k views

Wash sale rule with dividend reinvestment

Let's say I buy some stock. Two weeks later it pays a dividend which is reinvested in fractional shares of the stock. The next day I sell all shares at a loss. Would this be considered a wash sale? ...
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2 votes
2 answers
829 views

How are various types of income taxed differently in the USA?

From Dilip's reply when you make a withdrawal from your Traditional IRA, no matter which of your various IRA accounts you take the money from, part of the money is deemed to be taken from the ...
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24 votes
5 answers
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 £...
9 votes
4 answers
830 views

Is it a good investment strategy to go long on "boring" companies (AT&T for example) and keep them around just because of their dividends?

Is it a good investment strategy to go long on "boring" companies (AT&T for example) and keep them around just because of their dividends or would it be better to trade more frequently companies ...
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6 votes
3 answers
2k views

What are dividends, when are they paid, and how do they affect my position?

New to investing... Some stocks pay dividends but I'm not sure how they might affect my portfolio or in which measure this is important when evaluating a stock. I also don't know how to figure out if ...
4 votes
1 answer
891 views

Ex-dividend date and time zones

Is the ex-dividend date linked to the time zone of the market it is bought at? Let's imagine an American firms stock traded at NASDAQ and a German market, the ex-Dividend day being the 1st February. ...
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4 votes
2 answers
10k views

Ex-dividend date: How long do I have to hold a stock in order to get the next dividend?

I want to be a stockholder on record for a dividend. So lets assume I bought stock before the ex dividend date. Can I immediately sell the stock after the ex-dividend date to collect the dividend, or ...
  • 20.1k
2 votes
2 answers
175 views

What are the taxation rules for US non-resident aliens with respect to qualified dividends?

Are the rules different for qualified versus non-qualified dividends? Assuming no DTAA exists between the US and the country of residence.
2 votes
2 answers
284 views

Any ideas why REITS seem to be headed to zero?

Being old I have/had much of my 401 K in REITS for income. I specifically avoided mall and retail. Most imply that they are mostly residential mortgages. All are down substantially more than market ...
0 votes
2 answers
105 views

Do companies declare dividends on specific dates?

Are there specific dates for companies to declare ordinary dividends? If so, where can I find these dates? If not, why aren't there fixed dates to prevent excessive volatility and speculation about ...
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29 votes
9 answers
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 ...
11 votes
9 answers
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 ...
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15 votes
2 answers
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?
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8 votes
2 answers
1k views

What does a Dividend "will not be quoted ex" mean?

A recent dividend on NYSE:SNE (Sony) is described as "Will not be quoted ex". What does this actually mean? Does the dividend have an ex-date or not? Which day would be the last day to buy this ...
19 votes
5 answers
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 ...
  • 2,604
17 votes
5 answers
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 ...
  • 272
17 votes
3 answers
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? ...
  • 293
14 votes
4 answers
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 ...
  • 699
11 votes
4 answers
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,...
  • 906
7 votes
2 answers
623 views

Why some ETFs delay payment of dividends after Ex Date?

I was looking at ETFs and noticed that etf like QQQ, DIA( Ex date is 09/20/2019 but pay date is 10/15/2019) pay dividends about 5 to 6 weeks after the Ex-Dividend date . But other etfs (e.g IVV, VOO) ...
  • 3,397
6 votes
3 answers
287 views

Contracter with day job - limited company dividends

I currently have a 'day job' as a web designer. I am considering taking on some freelance work which I have been offered and this would be completed in evening/weekends whilst also retaining my day ...
6 votes
2 answers
1k views

Income vs growth securities in a downturn

It's generally accepted that "income (dividends) and growth (capital gains) are perfect substitutes (tax and transaction costs aside)". i.e. "In financial theory, there is no reason for a difference ...
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5 votes
1 answer
396 views

Are Morning Star Ratings really that important?

I'm trying to aid a family member in making some investment decisions. I've placed most of my money in Vanguard mutual funds and they have done pretty well. My family member has a "financial advisor" ...