Dividends

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phoenix_n

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How do dividends affect share price ?

Before a company declares a dividend does the share price normally increase in anticipation ? Are shares normally held onto until the dividend is sold or is a share sold 'with dividend pending'.

Can you still receive a dividend if you have sold the share ?
 
phoenix_n said:
How do dividends affect share price ?
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Technically they are built into it. Once the dividend goes ex dividend (ie the coupon has been allotted) the share price 'should' go down by that amount . Efficient market theory and all that. I say 'should' as other market news could of course force it up or down more than the dividend amount. To take this point further if you are valuing shares, part of your valuation would be to factor in dividends issued into the future to see if the price you pay is worth the return you are likely to get.

phoenix_n said:
Before a company declares a dividend does the share price normally increase in anticipation ? Are shares normally held onto until the dividend is sold or is a share sold 'with dividend pending'.
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Guessing that's a typo ("dividend is sold" bit)?? As I mentioned above the dividend should be factored into the share price. Whether the stock rises or not is purely dependant on market sentiment. It likely will go down though if you sell when it goes ex dividend (see point below).

phoenix_n said:
Can you still receive a dividend if you have sold the share ?
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Yes. If you sell it after it goes ex dividend. But then as per the first point above the price you'll get should factor in the fact that the new owner will not recieve this dividend.
 
phoenix_n said:
Am i right in saying that dividends are not taxed ?
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If the question is "do I have to pay tax on dividends?", yes, you do.

They aren't taxed at source and compliance is down to the holder, some have a witholding tax at 20% but then you must declare the tax on them at your marginal rate if your in the higher tax bracket.

Other threads cover this (http://www.askaboutmoney.com/showthread.php?t=39606&highlight=dividend+tax) in more detail and a trip to the Revenue site should clear it up for you.
 
Thanks. I thought they were taxed but a colleague assured that they were not.

With shares; CGT,Dividends... how does the revenue know (not asking to evade but curious) what amounts you may be making in equities ?
 
For Irish resident compaines:
A Dividend Witholding Tax of 20% is retained by the paying company and the balance is paid top the holder of the shares. Any further tax due eg 22% for a 42% rate tax-payer, has to declared and paid by self-assessment. The company has to pay the 20% deducted over to revenue along with details of payee.

The tax is deducted for all dividends except those paid to ther irish-resident companies (eg funds, life assurance companies), charities and ARF.

Similar deductions are made in US, canada and in most EU countries.
 
phoenix
they dont know but if you are ever audited its very easy for the to get these details and then you will have fines and interest to pay.
 
shelflife said:
phoenix
they dont know but if you are ever audited its very easy for the to get these details and then you will have fines and interest to pay.
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But on average out of 10 people would 9 pay all CGT and Dividend Tax or are we talking about 3 ?

My guess is 9 but not sure if i am right.
 
shelflife said:
phoenix
they dont know but if you are ever audited its very easy for the to get these details and then you will have fines and interest to pay.
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If you hold shares in a nominee account then I don't think that Revenue can see from the register of shareholders that you are a shareholder. I'm not sure what powers they might have to access stockbrokers' nominee account details though. Note that I am posting this for information only and not in any way to encourage tax evasion.
 
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