Dividend question

[Somestockguy]

Hi all, newcomer here

I see Adair's are set to pay out a dividend tomorrow. If I theoretically bought today, am I then entitled to the full dividend next day?

Also, what does it mean by "fully franked"

Thanks guys

 

[divs4ever]

Hi all, newcomer here

I see Adair's are set to pay out a dividend tomorrow. If I theoretically bought today, am I then entitled to the full dividend next day?

Also, what does it mean by "fully franked"

Thanks guys

hi ,

i very much doubt it

you needed to buy the day before it went ex-div. ( the date a day or two before the 'record date ' ) with the 'payment date later again often weeks/months later .

however to be safe i normally try to buy AT LEAST 3 trading days before the ex-div. date

fully franked means you can claim a tax deduction to go with the dividend now that USED to be 100% of a 30% tax rebate on the dividend value , however in recent years smaller companies have been given a tax cut so SOME are only charged 25% tax

so for some small companies it is 100% of a 25% rebate

you will have to watch for that when you are researching

cheers

 

[Value Collector]

Hi all, newcomer here

I see Adair's are set to pay out a dividend tomorrow. If I theoretically bought today, am I then entitled to the full dividend next day?

Also, what does it mean by "fully franked"

Thanks guys

To be entitled to the dividend you need to own the shares before the Ex dividend date.

Fully franked, means that the shares come with a franking credit, basically is a tax credit, so tax on the dividend has already been paid at the company tax rate of 30%.

for example, a 70cent fully franked dividend comes with a 30cent tax credit, the full combined $1 gets added to your tax return as income, but they also give you a 30cents credit from because the company has already paid 30cents in tax.

 

[frugal.rock]

However, to be able to legally claim the franking credit (Frankie), one needs to have held or owned the stock for a minimum of 55 days, after settlement, I believe.

The share price usually dips the trading day before the "record date".
Usually the share price will significantly dip around the same amount as the dividend amount, but lately there has been a quite a few cases where it has dipped significantly more, probably due to the haste of "dividend scalpers" jumping off in great haste.
Not a great stategy at the moment, probably owing to fact it's a fairly simple strategy and there is overflows of "dumb money" sloshing around the markets.

 

[qldfrog]

And remember with fully franked, you get access to the tax rate if company vs yours..so the benefit will vary vased on your own actual tax rate
Not taxable, you get the full franked amount credited.
But if you are taxed at 48/50%,, it will just mean you will be taxed an extra 20pc on these dividend.
Based on circumstances,you be be better off that way, ir with a capital gain to offset other or older capital losses..
Imho,there is no easy one fits all answer.dyor
Strangely, for me,dividends are more an extra side effect of my tradings except for trust returns etx...everyone has his iwn winning or failing strategy

 

[frugal.rock]

I like the point that Mr @Value Collector makes about input credits being part of the dividend equation, it was something I was aware of but hadn't run thought processes over it.

In my mind, the policy by the labor party leading into the last Federal elections to abandon it (Input credits) was political suicide.
What was Mr Negative aka Bill Shorten thinking?

As I get older, the methods I use to eek out an existence and preservation of capital become more important.

Now, I think a new thread titled
"UN Vaccinated Apartheid" may be in order...

 

[Austwide]

For small investors the 45 rule has a limit

The holding period rule requires you to continuously hold shares for at least 45 days (90 days for certain preference shares) to be eligible for the franking tax offset. However, under the small shareholder exemption this rule does not apply if your total franking credit entitlement is below $5,000.

 

[frugal.rock]

For small investors the 45 rule has a limit

The holding period rule requires you to continuously hold shares for at least 45 days (90 days for certain preference shares) to be eligible for the franking tax offset. However, under the small shareholder exemption this rule does not apply if your total franking credit entitlement is below $5,000.

Brilliant !
I think I am going to hand my tax matters over to an accountant...
there's so many unknowns.
I do miss my previous long term accountant who retired, he really was a wise old owl and I know he always paid for himself and then some!

 

[Belli]

For small investors the 45 rule has a limit

The holding period rule requires you to continuously hold shares for at least 45 days (90 days for certain preference shares) to be eligible for the franking tax offset. However, under the small shareholder exemption this rule does not apply if your total franking credit entitlement is below $5,000.

Just to add the 45/90 rule does not include the day of purchase or sale. The intention of the requirement is the investments is to be held "at risk". As was all the day of purchase/sale being excluded so are the days where the financial risk of holding the share is materially lessened such as using risk reduction strategies as options, hedging or futures. That is the complicated side of things however.

 

[Sharkman]

you are allowed to hedge off up to 70% of your underlying risk and still count it towards the 45 day rule. quite useful if you want to use dividend stripping tactics on the large caps which have (relatively) liquid options to harvest the franking credits whilst reducing your delta risk for the holding period.

When you are not entitled to claim a franking tax offset | Australian Taxation Office

www.ato.gov.au

if using a non-linear instrument like options you do have to recalc your position every day though, as days where your net delta drops below 0.3 don't count towards the 45 days.