Dividend, Share Price: Is there a connection?

roland · 11 August 2008

Re: Dividend, Share Price. Is there a connection?

rozella said:
Sold WDC today on the open @ 1690.0
Bought 8th August @ 1655.0 with a margin of 80%
Investment 331.0/unit
Exdist date 11th August
Distribution 53.25/unit zero franked
Gross profit 88.25/unit = 26.66% return on investment. 3 days

well done rozella, it's not usual for the SP not to fall by the div value on the day of going ex div - good call

rozella · 11 August 2008

Re: Dividend, Share Price. Is there a connection?

Thanks roland,

.....& thankyou to the US market on Friday night.

rozella · 13 August 2008

Re: Dividend, Share Price. Is there a connection?

Bought HIL today @ average 383.74/share with a margin of 65%
Investment 134.31/share
Exdiv date 9th September
Dividend 14.0/share fully franked 6.0/share

Ferret · 14 August 2008

Re: Dividend, Share Price. Is there a connection?

Glad to see you're back in the market, Rosella. Gives me a bit of confidence that things won't go completely pear shaped.

Good luck!

Ferret

rozella · 14 August 2008

Re: Dividend, Share Price. Is there a connection?

Thanks for the comment Ferret.

Sold HIL today @ average 399. 87/share
Bought 13th August @ average 383.74/share with a margin of 65%
Investment 134.31/share
Exdiv date 9th September
Dividend 14.0/share fully franked 6.0/share
Gross profit 16.13/share = 12.01% return on investment. 1 day

rozella · 19 August 2008

Re: Dividend, Share Price. Is there a connection?

Bought CBA today @ 4150.0 on the open with a margin of 75%
Investment 1037.5/share
Post dividend which was 153.0/share fully franked on the 18th August.

Fool · 19 August 2008

Re: Dividend, Share Price. Is there a connection?

Hey Rozella,

Do you need to hold CBA for 45 days to get the franking credits?
if you bought on the 18th.

rozella said:
Bought CBA today @ 4150.0 on the open with a margin of 75%
Investment 1037.5/share
Post dividend which was 153.0/share fully franked on the 18th August.

brty · 19 August 2008

Re: Dividend, Share Price. Is there a connection?

Fool,

Rozella bought X-div not cum-div.

brty

Fool · 19 August 2008

Re: Dividend, Share Price. Is there a connection?

yeah thanks, just saw that.

but if he bought before the 18th.??

brty said:
Fool,

Rozella bought X-div not cum-div.

brty

rozella · 19 August 2008

Re: Dividend, Share Price. Is there a connection?

G'day fool,

brty is correct, I bought post dividend.

To answer your question if I had bought prior to the 18th:
To be eligible for the franking credits, I would need to hold for a clear 45 days from when I bought them excluding the buy & sell days, unless your total franking credits for the year are less than $5000 (for an individual).

If your total franking credits are less than $5000, then the holding time is not important, but go to $5001 & you will forfeit all franking credits that don't comply with the rule.

Fool · 20 August 2008

Re: Dividend, Share Price. Is there a connection?

Yeah sweet, been doing some reading on it, so is your strategy put you over the $5k threshold?

Take this example how do I work out the franking credits I would receive?

44cent * 30% =13.2cent?

44c 100% Interim 44C FR@30% DRP NIL DISC. MAX CAP@20000

What does MAX CAP mean?

Was taken from here
http://www.asx.com.au/asx/research/...panyName=&principalActivity=&industryGroup=NO

Going to sign up for the trial rozella, just waiting on tax refund and get my head around this.

rozella · 20 August 2008

Re: Dividend, Share Price. Is there a connection?

G'day Fool,

Calculation of franking credits on a 44 cent dividend:

examples
100% franked: 44.0 x 0.42857 = 18.857/share
60% franked: 44.0 x 0.42857 x 0.60 = 11.314/share
30% franked: 44.0 x 0.42857 x 0.30 = 5.657/share

Companies pay 30% tax, so if a gross dividend was 100 cents, they would pay 30 cents tax leaving a nett dividend of 70 cents.

.......hence 30 divided by 70 = 0.428757 We are quoted the nett dividend, so just multiply the nett dividend by 0.42857 depending if fully franked (taxed) to calculate the franking credit.

white_goodman · 20 August 2008

Re: Dividend, Share Price. Is there a connection?

does the 45 day rule apply for CFD's...

say i bought on the 25th of august and the ex-div date was 26th of august....and then i sold 27th of august...

do i still get the dividend franking credits etc if im going long through CFD's? there any fines/taxes for holding so short?

rozella · 20 August 2008

Re: Dividend, Share Price. Is there a connection?

white_goodman said:
does the 45 day rule apply for CFD's...

say i bought on the 25th of august and the ex-div date was 26th of august....and then i sold 27th of august...

do i still get the dividend franking credits etc if im going long through CFD's? there any fines/taxes for holding so short?

G'day white_goodman,

Just about all CFD providers don't compensate for franking credits, therefore the 45 day rule will not apply....the rule is only for franking credits.

CFD providers pay the dividend on exdiv day anyway.

You could have bought on the close on 25th Aug & sold on the open 26th Aug (exdiv day) & be entitled to the dividend amount whether they are CFDs or whatever.

If you go short with CFDs, the provider will deduct the dividend amount from your account. Franking credits don't come into the equation.

Fool · 20 August 2008

Re: Dividend, Share Price. Is there a connection?

I am with ya now, thanks for explain,

So if my tax payable(TAX OWED) amount was $10000

And the tax I paid was also $10000(TAX PAID), excluding all other factors…

I would be even (no tax return), however if I have say had $5000 franking credits.

The tax I paid figure would increases to $15000??

So the minus the TAX PAID – TAX OWED = REFUND

I would get a $5k refund.

This sound right?

rozella · 20 August 2008

Re: Dividend, Share Price. Is there a connection?

G'day Fool,

You are almost correct except the franking credit is also classed as income.

Example 1:
If your taxable income was $50,000 & you had say $8000 allowable franking credits, then your taxable income now becomes $58,000

I don't know the tax rate for $58,000, but lets say it is 30% for the exercise.
Therefore your tax payable would be 58000 x 0.3 = $17,400

Then you deduct the franking credit of $8000

$17,400 - $8,000 = $9,400 tax payable

Example 2:
If your taxable income was $10,000 & you had say $8000 allowable franking credits, then your taxable income now becomes $18,000

I don't know the tax rate for $18,000, but lets say it is 13% for the exercise.
Therefore your tax payable would be $18000 x 0.13 = $2,340

Then you deduct the franking credit of $8000

$2,340 - $8,000 = -$5,660 tax refund

Fool · 20 August 2008

Re: Dividend, Share Price. Is there a connection?

sweet I get ya thanks make sense now

rozella said:
G'day Fool,

You are almost correct except the franking credit is also classed as income.

Example 1:
If your taxable income was $50,000 & you had say $8000 allowable franking credits, then your taxable income now becomes $58,000

I don't know the tax rate for $58,000, but lets say it is 30% for the exercise.
Therefore your tax payable would be 58000 x 0.3 = $17,400

Then you deduct the franking credit of $8000

$17,400 - $8,000 = $9,400 tax payable

Example 2:
If your taxable income was $10,000 & you had say $8000 allowable franking credits, then your taxable income now becomes $18,000

I don't know the tax rate for $18,000, but lets say it is 13% for the exercise.
Therefore your tax payable would be $18000 x 0.13 = $2,340

Then you deduct the franking credit of $8000

$2,340 - $8,000 = -$5,660 tax refund

rozella · 21 August 2008

Re: Dividend, Share Price. Is there a connection?

Sold CBA today @ 4065.0
Bought 19th August @ 4150.0 on the open with a margin of 75%
Investment 1037.5/share
Post dividend which was 153.0/share fully franked on the 18th August.
Gross loss 85.0/share = 8.19% loss on investment.

Bought HIL on the close @ 392.0 with a margin of 65%
Investment 137.2/share
Exdiv 9th September
Dividend declared 14.0/share fully franked 6.0/share

rozella · 25 August 2008

Re: Dividend, Share Price. Is there a connection?

Sold HIL today @ average 417.85/share
Bought 21st August @ 392.0 with a margin of 65%
Investment 137.2/share
Exdiv 9th September
Dividend declared 14.0/share fully franked 6.0/share
Gross profit 25.82/share = 18.84% return on investment.

Will re-enter if opportunity arises.

badman_thelame · 27 August 2008

Re: Dividend, Share Price. Is there a connection?

Hi all,

I have also been trying to attempt a dividend strategy, but to limited success in this bearish market.

I'm not sure if this will work, but I think you guys can tell me where the flaws are in the plan im going to outline below.

I normally trade in CFD's and the leverage can be both a benefit and more of a risk at times.

If I buy a parcel of 1000 shares in say any security which is going to go ex-dividend tomorrow.

Can I also hedge the losses with say a put option at the price which I bought the CFD's.

From what I know, since there can be a near perfect hedge, the only losses should be the brokerage for the CFD's and the premium paid on the option.

Am I missing anything here, and any comments will be greatly appreciated.

Dividend, Share Price: Is there a connection?

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