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Retirees Seeking Dividend Growth

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I have what might possibly be a silly question. How do you calculate dividend yield? I know the formula but I am asking specifically about the timing. Do you calculate it based on the sum of the dividends paid last calendar year, last financial year or immediately after a dividend is paid? I guess it could depend on the 'cycle' of payment. What I mean is that if a company pays using an interim/final dividend structure you would need to wait until the final dividend is paid to make the yield calculation. So making a 'bulk' calculation of multiple stocks at any particular point in time, say at the end of each month could be wrong. What are your thoughts?

Reason I ask: I'm researching a rules based trading model build using dividend yield. My initial thoughts are:

Sum of last calendar year's dividends / Current price = yield

Is this over-simplistic or flawed in any way?
 
rb250660 said:
I have what might possibly be a silly question. How do you calculate dividend yield? I know the formula but I am asking specifically about the timing. Do you calculate it based on the sum of the dividends paid last calendar year, last financial year or immediately after a dividend is paid? I guess it could depend on the 'cycle' of payment. What I mean is that if a company pays using an interim/final dividend structure you would need to wait until the final dividend is paid to make the yield calculation. So making a 'bulk' calculation of multiple stocks at any particular point in time, say at the end of each month could be wrong. What are your thoughts?

Reason I ask: I'm researching a rules based trading model build using dividend yield. My initial thoughts are:

Sum of last calendar year's dividends / Current price = yield

Is this over-simplistic or flawed in any way?
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Different people and different organisations calculate it differently. For example most news papers just use the last 12 months worth of dividends, where as CommSec website consensus forcast of future dividend.

I guess it's a personal thing, and which data you input into the calculation should depend on what you are trying to find out, or understand.

Obviously future dividends are more important than historical ones, but it's also next to Impossible to know with certainty what the future dividends will be, so i normally do a few calculations eg my best estimate of future dividends, as well as a best and worst case.
 
rb250660 said:
I have what might possibly be a silly question. How do you calculate dividend yield? I know the formula but I am asking specifically about the timing. Do you calculate it based on the sum of the dividends paid last calendar year, last financial year or immediately after a dividend is paid? I guess it could depend on the 'cycle' of payment. What I mean is that if a company pays using an interim/final dividend structure you would need to wait until the final dividend is paid to make the yield calculation. So making a 'bulk' calculation of multiple stocks at any particular point in time, say at the end of each month could be wrong. What are your thoughts?

Reason I ask: I'm researching a rules based trading model build using dividend yield. My initial thoughts are:

Sum of last calendar year's dividends / Current price = yield

Is this over-simplistic or flawed in any way?
Click to expand...

Maybe I'm just lazy or don't know what I'm doing but I tend to not focus much, if at all, on a company's dividend in deciding its "investability".

I just look at its "earning power" and that's pretty much its "dividend" to me, the "owner".

Once that's worked out/estimated, dividend payout policy are interpreted in context of that earnings. I mean, if a company's earning is weak and looks to be weak for the coming years... it shouldn't pay dividends, or restart that DRP to hang on to the cash.

For a weak company, or one not earning enough to pay debt and liability and reinvest... but it still pay a dividend. Brings into question management's priorities - concern for share price [and their bonuses] or proper business management.

I know dividends got to be paid, certain funds and investors need to be attracted and all that. Just a focus on one figure for investment yield might lead the investor to being played.
 
luutzu said:
or one not earning enough to pay debt and liability and reinvest... but it still pay a dividend. Brings into question management's priorities - concern for share price [and their bonuses] or proper business management.

I know dividends got to be paid, certain funds and investors need to be attracted and all that. Just a focus on one figure for investment yield might lead the investor to being played.
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Unless the higher dividend is being used to purposefully reduce a companies equity, by returning capital to share holders.

Disney is currently doing this via Share buyback, they are currently buyback ship loads shares back, so much so that the total buybacks and dividends is about much higher than earnings, Basically replacing balance sheet equity with long term debt, due to the debt being fairly cheap at the moment.
 
Value Collector said:
Unless the higher dividend is being used to purposefully reduce a companies equity, by returning capital to share holders.

Disney is currently doing this via Share buyback, they are currently buyback ship loads shares back, so much so that the total buybacks and dividends is about much higher than earnings, Basically replacing balance sheet equity with long term debt, due to the debt being fairly cheap at the moment.
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True. Kept forgetting that a buy-back is a form of capital return.

btw, how would the share buyback transact in the financial statements? Can't be just the cash asset being reduced by the cost of shares bought back [excl. brokerage etc.], reduce the contributed equity...

It's good you know why Disney is buying back. Some buy back just doesn't make much sense... though I guess they tend to increase the share price, or at least keep it from falling further, so no one ever complaint about it.
 
Coronavirus has turned things upside down in terms of dividend expectations.

UBS says so far, 38 stocks in the ASX 200 have suspended, deferred or cut dividends and a further 60 have seen dividend forecasts fall by more than 20 percent.
Aurizon, Ausnet Metcash, Coles Group, APA Group and Woolworths as having the best prospects for investors focused on dividend payments.
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AGL Energy, Amcor, Brambles, Bunnings landlord BWP Trust, CSL, Inghams, Kogan, Magellan, ResMed Rural Funds, Wesfarmers, Telstra and Clover Corporation should provide reliable earnings streams.
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They highlight SkyCity, Sydney Airport, JB Hi-Fi, Scentre Group, Challenger and Vicinity Centres as having dividend payout expectations that are too high. Other companies likely to pay a smaller dividend in the year ahead, or no dividend, are Alumina, ANZ, NAB, Northern Star, Oz Minerals, QBE, Servcorp, Stockland, Western Areas and Westpac.
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