Irish Dividends v UK Dividends

Brendan Burgess said:
Really?

Where did you invest to get better returns than this?

https://www.askaboutmoney.com/threa...rty-prices-and-borrowing.133122/#post-1009150
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Brendan, I would be particularly referring to bank shares and not the Iseq overall. But to tell me that if I do not understand a concept then I should stay away from investment is condescending.



joe sod said:
But in UK you can earn upto £5000 dividends tax free (i only learned this recently from another poster) which explains why so many people do not pay tax on dividends. Ireland has diverged substantially from UK in terms of taxation over last 20 years, if more taxes introduced in ireland over next few years (which seems to be the trend) there could be big exodus of high skilled people there despite brexit.
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I think this 5k may be changing to 2k from April.
 
dub_nerd said:
Not everyone's in the same boat. I gave up work partly because I was sick of 50%+ tax (though mostly because I wanted to do something else). Now my dividends get taxed at 0-20%, much less than capital gains.
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Bear in mind that the full amount of any dividend payment is subject to income tax whereas only that element of the proceeds of a share sale that represents a taxable gain, over and above the annual exemption, is subject to CGT.

It's not just a question of comparing your marginal rate of income tax v CGT.
 
Daddy Ireland said:
Excellent analogy Galway. Could not actually have put it better myself.
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i may be completely wrong on this one , i just cannot get my head around the problem with a ( in my eyes temporary price drop ) dividend payout adjustment
RedOnion said:
Has every Economic Nobel prize winner ever got it wrong?...


In this case, all other things being equal, the share price would have risen even more if there hadn't been a dividend.


Telecoms have pretty predictable cash generation patterns. Without differing tax treatment, an investor shouldn't care whether excess cashflow is returned to shareholders via dividend or share buybacks (at&t for example does both).


Pension funds don't care about the tax treatment, they invest for total return, and are investing for the positive cashflow generated by the company, not the dividend.

Rather than reading older economic theory by Nobel prize winners, there was a recent paper 'The Dividend Disconnect' which examines the topic and the behaviours of investors. Some interesting interviews of the authors on YouTube to save reading a 60 page paper!
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Brendan Burgess said:
As I have said...


You should stay away from investment if you can't grasp this very, very, simple concept.

Brendan
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dont give up on me yet brendan , im a slow learner but i am tenacious :D
 
galway_blow_in said:
i just cannot get my head around the problem with a ( in my eyes temporary price drop ) dividend payout adjustment
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Maybe easiest if you imagine a company that has issued just one share to a single 100% shareholder. At the start of the year the share (and the company) is worth €1. It makes €2 profit and pays out a €1 dividend. The shareholder now has a share worth €2 (€1 + €2 - €1) and a €1 dividend. If there had been no dividend the share would have been worth €3. There is no magic extra money regardless of whether a dividend is paid.
 
Daddy Ireland said:
I would be particularly referring to bank shares and not the Iseq overall.
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Yes, but I referred to bank and other shares. Read anything I have written about a balanced portfolio of shares, at the time or since.

Daddy Ireland said:
But to tell me that if I do not understand a concept then I should stay away from investment is condescending.
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Apologies,but it's so frustrating. This is as basic as it gets and it surprises me that you and Galway don't get it. I can't explain it in any simpler terms.

Brendan
 
Daddy Ireland said:
He's not a rare exception Gordon. An exception maybe but so will soon be an exception too. So there are more of us out there than you think.
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With respect, I would contend that most people who are in receipt of dividend income have total incomes in excess of €34k a year.
 
I don't know if people are just trolling but surely if you don't understand the bare minimum that a companies value will fall by the amount of the dividend payout then you probably shouldn't be investing, although I believe in efficient markets and its probably hard to lose money buying or selling anything liquid enough.

If you believe that the share price doesn't drop by the dividend amount then how have you not seen the massive opportunity of loading up your degiro account and buying the highest dividend paying stocks pre dividend payout and selling straight after they payout so you pocket some quick cash for nothing?

There is no extra money created you can't pay out millions and expect the company to remain the same value this is crazy talk , I mean i'll float my own company tomorrow buy all the shares myself pay myself declare a 100% dividend and double the value of my company overnight , rinse and repeat and I'm bigger than Apple in no time.
 
Fella said:
I don't know if people are just trolling but surely if you don't understand the bare minimum that a companies value will fall by the amount of the dividend payout then you probably shouldn't be investing, although I believe in efficient markets and its probably hard to lose money buying or selling anything liquid enough.

If you believe that the share price doesn't drop by the dividend amount then how have you not seen the massive opportunity of loading up your degiro account and buying the highest dividend paying stocks pre dividend payout and selling straight after they payout so you pocket some quick cash for nothing?

There is no extra money created you can't pay out millions and expect the company to remain the same value this is crazy talk , I mean i'll float my own company tomorrow buy all the shares myself pay myself declare a 100% dividend and double the value of my company overnight , rinse and repeat and I'm bigger than Apple in no time.
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fella , i can assure you im not trolling , ive never been in doubt about how the quarterly dividend cash payout amount will correspond with a decrease in value of the underlying share on that day , i understand that completely ! , i just always thought as shares move up and down all the time anyway , its merely a case of saying thank you mr cash dividend and my stock holding should within a few weeks get back to where it was pre ex dividend date

if you park the disadvantages surrounding tax on dividends in this particular country , is that such a bad way to build wealth ? , is it that much worst than growth stocks which pay no dividend ( why not have both ? )

i dont own any dividend paying stocks right now , i dont own any individual stocks at all , just two dollar denominated european and japan based etf,s , i got a cash payout of several hundred dollars about a month ago and just re bought more of the same etf a few days later when the price pulled back abit
 
galway_blow_in said:
its merely a case of saying thank you mr cash dividend and my stock holding should within a few weeks get back to where it was pre ex dividend date
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I don't get this part , looking at it from a value/arbitrage point of view if this was the case you could make money by buying after the stock price decreases waiting a few weeks and selling.

I think you may have seen these kind of price movements previously and assume that this is always the case but it is not.
 
Actually there are hedge funds that seek to exploit investors like Galway that do not fully understand dividends - they use a technique known as the dividend capture strategy.

Basically, they buy a stock on the day before it goes ex-div and then sell it ASAP before the stock price fully adjusts to accurately reflect this event.

Over the long term the markets are highly (but not perfectly) efficient at pricing stocks but behavioural biases remain that create arbitrage opportunities.
 
Above three articles are relevant to how this thread developed. Personally I am quite happy having read all to invest in dividend paying stocks over non dividend paying stocks.
 
Daddy Ireland said:
Particular reference to Berkshire Hathaway (non paying dividend) v Johnson and Johnson (dividend payer.)
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Except the article doesn't actually say that Johnson and Johnson has outperformed Berkshire Hathaway over any reasonable time period. Because that would be patently untrue.

It is certainly true that over very long time periods value stocks have historically outperformed growth stocks and that value stocks, in general, tend to pay higher dividends than growth stocks.

Whether this anomaly will persist in the future is anybody's guess. My own view, FWIW, is that the value premium was at least partly explained by the behavioural biases of individual investors who now make up an increasingly small portion of the market. To put it another way, there are fewer suckers playing the game than was historically the case.
 
Sarenco said:
Except the article doesn't actually say that Johnson and Johnson has outperformed Berkshire Hathaway over any reasonable time period. Because that would be patently untrue.

It is certainly true that over very long time periods value stocks have historically outperformed growth stocks and that value stocks, in general, tend to pay higher dividends than growth stocks.

Whether this anomaly will persist in the future is anybody's guess. My own view, FWIW, is that the value premium was at least partly explained by the behavioural biases of individual investors who now make up an increasingly small portion of the market. To put it another way, there are fewer suckers playing the game than was historically the case.
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"an increasingly small portion of the market", what does this mean an "increasingly small" , is this not Trump speak
 
I was looking at dividends as sort of reducing risk in that the payment out shaves off a bit of risk in the shares plummeting to nothing - taking cash out. But I’m thinking again now.
 
Dividend income brings me in around 5 -6K a yr. I look for stock with good dividend yield AND LT value/ prospects. On UK shares, increasingly I'm averse to them due, in part, to FX volatility, and the likely impact of Brexit. As an aside, a large company with good dividend yield went bust in the UK recently. Share buying is somewhat risky, and propectors should spread investments across a wide range of assets.
 
I am genuinely frightened at the prospect of people investing directly in shares when they haven’t a notion. This thread has been an eye-opener.

There is very little, if any, Sterling risk if you hold shares in a UK based multinational. Take the example of UK plc which is listed on the London Stock Exchange and quoted in Sterling. Its customers are all over the world. You’re here in Ireland and you hold the stock. Sterling collapses; are you worried? No is the answer. Its revenues are in foreign currencies so they are now worth more to the company, and the share price adjusts accordingly.
 
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