Yes you can.

Actually yield varies according to the price you paid for the share. While most people decide based on 1st year expected yields based on current share prices. Continuous dividends actually increases your yield year by year since you purchase price is reduced based on every dividend you received.

Ultimately, the investment pays for itself eventually just by holding on to it. And from then on, its basically free money every year. Though on average, most dividend paying companies are priced where it takes at least 10 years to recoup your capital if based on current prices. But price appreciation along the way affected by their growth will help reduce that time needed to recoup the cost of purchase.

At least that is how I see it. Anyone thinks the same?

Yup thats right. Today share price will jump.

That is to calculate current dividend yield which is not as accurate because your cost of entry might not be the same as current share price, also since current share prices are adjusted cum dividend, the DY might seem a lot higher than before.

For example;

Share A is currently at RM1.50, it announces a special dividend of 50 sens and the ex-date is tomorrow.

When tomorrow comes, Share A is now trading at RM1.00 after adjustment from dividend ex-date.

The day after newspaper will list out in their business section as Share A RM1.00, dividend is 50 sens, and DY is 0.5/1 = 50%

But actually the price prior to dividend is RM1.50, so the correct calculation of DY is 0.5/1.5 = 33%.

In my opinion, to calculate an accurate dividend yield you are getting for your investment you have to based it on your average buying price. Followed by subtracting every cash dividend you've received on that share. So for your initial investment, you can get a very high DY every year which is why some investors who already gotten back all their initial capital is just collecting free cash.

To see if a current stock is worth the dividend, try to estimate their future earnings and based on their dividend policy if they have one and their historical payouts, figure out their expected future dividend. Then using that figure, calculate a stock price you are willing to pay for that yield. Then all you need to do is wait for the price to come to you or pay a premium for it.

For example, TDM has a 30% dividend policy and previously paid out 50% of their EPS. This years earnings has already reached 27.5 sens and expected to hit 35 sens at least. Based on 35 sens expected EPS, I assume 50% (based on previous payout) will be distributed as dividends.

35 sens EPS * 50% payout = 17.5 sens dividend

Based on 17.5 sens dividend estimation and current market price of RM3.00, the expected DY is 5.83% if I buy in now. If I'm aiming for a higher DY, I will wait for the price to drop further if I think the market is bearish. Or I might choose to buy it now fearing the price might rebound higher as it nears it's dividend announcement date. This choice is ultimately up to you since you can decide how much you are willing to fork out to earn the DY expected.

Of course this is not guaranteed since its all based on estimation, for example the company might report an unexpected loss which might lower the EPS and ultimately the dividend. But can be used as a guide to calculate your entry price based on the dividend you want to receive.

TDM is just an example since it's familiar in this thread, not recommending it. Try not to take all figures in the newspapers without finding out how the figures come to be. Some dividends are one off affairs and will not be repeated, while some who paid high dividends last year may already be suffering lower revenue this year and might not pay anything.

Sifu rosdi1's answer is correct. Do not be confused about the lodgement date, just concentrate on the ex-date.

Reason for the 2 dates is because of the registering of new shareholders takes up to 4 days, or T+3. This is to ensure the selling party's name is wiped and the buying party name is entered.


So for instance I hold the share on the 14th (assuming ex-date is 15th) and sold it to you on the same day in the market. My name will still be on the list until the 17th. But the last lodgement date will ensure my name will be wiped off because the records of me selling the share will appear on the 17th, so I can't get the dividends. But you as a buying party, your name will only start appearing on the 17th, so on the last lodgement date of the 18th, your name will appear as a new shareholder. This is to ensure we both do not get the dividends for the same share. And the deserving shareholder (which is you) get the dividend only. Only names appearing on the list of shareholders on the 18th will get the dividends, not earlier or later.

So don't worry about the lodgement date as it's a requirement or something to publish it. The lodgement date is always T+3 (not including weekends) of the ex-date.

There is always 3 dates in a dividend announcement;

Ex-date = If you hold the share on 9am (market open) of this date, you get the dividend, if you sell before this (before 5pm yesterday), you don't.
Lodgement date = Name changing of shareholders, not important for you to know.
Payment date = This is when the cheques and e-dividends be paid from the coffers to the distributing office.


Note: If you sold your share on the 15th, your name will still be on the list on the 18th, so means you will still get the dividends. But the new buyer will not get the dividends because his name will only appear on the 19th.

This post has been edited by skiddtrader: Mar 26 2011, 09:03 AM

Hey foofoosasa,

What you're looking for is the holy grail of all investors. The best is to find a company which is still growing, has a healthy dividend policy and also fundamentally strong. You got PM.

I think with special dividend is very possible Panamy, GAB, etc.

Had a 4 figure cheque with Opcom special dividend.

5 figures my next goal.

This post has been edited by skiddtrader: Jan 11 2012, 06:02 PM

Neo is not a mod here.

Maybe he meant cheeroy.

6% based on what?

All I can say is TDM is a great buy if you bought it below RM3. Currently quite expensive in terms of their historical valuations and will only stay this high as long as the CPO price does not collapse below RM3000. Just announced 18.5 sens dividend.

Actually it's not really accurate to calculate as such because most of the time, the 'good' dividend counters are normally priced in for future dividends.

This is because the market is confident of its ability to pay dividends and also its growth prospects.

For instance in regards to FD, you would have to put the sum in April 2011 in order to see the interest payment in April 2012. And you have to be 'in' the FD to earn the dividends. Where as for stocks, you don't have to be commited for the entire year. You can be an investor for a day and still be eligible for the dividend. Thus the opportunity costs of FD is higher for people who have funds to invest.

In regards to TDM, currently priced ar RM4.73. Buying now for the dividend to be paid this year (May 2012), doesn't seem very lucrative in terms of yield. But if compared to FD, it is still better. Because in April 2011, TDM is only priced < RM3.00. If the same amount is used to buy TDM or put in FD, and the sum is 'locked in' for the entire year, the FD will nett you 3.25% this year. But TDM will nett you >57% including capital gains and dividends.

I quoted this example because stocks unlike FD has the ability to grow (and shrink!). Thus it is more important to judge a dividend stock not by it's immediate yield (Current prices vs dividend), but rather the growth prospects of it's business in the future which will naturally affects the dividend. And for FD, you would have to 'earn' the dividend by being locked in. Only comparable if using data for the stock from the same time the FD is locked in.

So if you think you spotted a dividend stock by it's dividend history, check the growth of the EPS as well. Is their business expanding, are they growing, are they healthy in terms of cash generation etc?

For dividends, the most important date is the ex-date.

If you sold before the ex-date, you won't be entitled. If you've bought it on the ex-date itself, you won't be entitled.

Example,

if Ex-date is 2nd April, you would have buy the stock before 5pm of 1st April and hold it to the next day to be eligible for the dividend. If you sold your stock before 5pm 1st April, then you get nothing.

1st April 5PM > Dividends < 2nd April 9AM

Maybe future dividend will be higher? Are you calculating the DY based on last year's payout?

Past 2 years, their interim dividends is about 2.5 to 3.5 sens. Maybe now starting this year will start paying out 4-5 sens dividend?

Their 1st quarter results are very encouraging, higher than any quarter of last year. There is no reason why they won't pay higher dividend if their EPS is growing. I believe Wellcall is 50% dividend policy but recent years they have been paying much higher.

Normal household don't use much hoses other than their gas hose or garden hose.

These hoses are used primarily in industries. If industries are picking up, then definitely higher demand. Or better cost control.

TDM aren't really planting new fields for expansion although they have plans to do so. Meaning their profit growth is due to CPO price. So as long as CPO prices hold, they can maintain their profits but it won't grow without reason.

Yeah expected results to be lower because if you checked their 3 months production from Jan to March, it is lower than last years Jan to March production. Also prices are softer then, but this quarter might see some improvement as prices have stayed above RM3200, only left to see their production figures.

If you are looking to buy TDM, you might timed it after their dividend Ex-date because prices ex dividned tend to be weaker for some reason as investors lose interest in it and traders start dumping if no activity. So there is a chance Share will dip below RM4.20 range ex dividend.

Haha yeah wrong reasons indeed.

Did not expect TDM to be so quickly be sold down below RM4.20 because dividends are not ex yet.

I have not looked at TSH figures yet, but if you think both are similar then just choose the cheaper one. I mean in valuation terms not in actual price.

This post has been edited by skiddtrader: May 17 2012, 06:20 PM