Dividends

D

Daddy

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AIB have announced a final dividend of almost 52cents a share.

If I take this in cash is it paid out net of 20% tax i.e i receive almost 42cents a share.

Thanks
 
Found that 20% withholding tax is deducted.

Shares go ex dividend next Wed 27th Feb.

So if I buy before that date I get the dividend I think.

If I wanted to sell my shares on Thursday 28th Feb will I still be entitled to get the dividend cheque ?
 
I have another query re dividends:

First time share investor in the last week - among which I bought AIB shares for long term value I hope.

This may be a stupid question but . . .
when in 2008 is the dividend for 2007 paid and would I get it even though I didn't hold shares at the 31st december 2007 but would presumably hold them at that 2008 date?

By the way, does anyone know if there is an equivalent book 'Investing in Shares for dummies?' ie beginners guide?

Thanks for any advice.
 
Dividend
The Board is recommending a final dividend of EUR 51.2c per share payable on 23 April 2008 to shareholders on the Company’s register of members at the close of business on 29 February 2008. The final dividend, together with the interim dividend of EUR 27.8c per share, amounts to a total dividend of EUR 79.0c per share, an increase of 10% on 2006
 
Daddy said:
If I take this in cash is it paid out net of 20% tax i.e i receive almost 42cents a share.
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Remember that dividends are assessable for income tax so if you pay 41% normally then you are still liable for the additional 21%.
 
what is the tax treatment of dividends if you take the scrip option where you get additional shares instead of income?can you do this with AIB? it would be great if they could be assessed when they are sold as fully liable to cgt rather than every year as income
 
It would indeed, but I'm afraid that's not the case. You are assessable to income tax on the value of the new shares (and any residual entitlement) in the same way as if you received a cash dividend. The only advantage of DRIP schemes is that they enable you to increase your holding without incurring dealing costs.
 
DrMoriarty said:
The only advantage of DRIP schemes is that they enable you to increase your holding without incurring dealing costs.
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Well - usually lower rather than no dealing costs as far as I know. For example Vodafone DRIP charges UK SD of 0.5% and a transaction charge of 0.5% if I recall correctly.
 
Sorry; by dealing costs I meant stockbrokers' fees. Stamp duty is still chargeable, and some DRIP schemes may also impose a transaction charge.
 
Just to be clear:

If I take the AIB dividend in April as extra shares and retain the shares for several years am I supposed to pay up the tax of 21% on the difference this year and not when I sell them eventually.
 
Yep. It's income this year, so should be declared (and the tax paid) at the end of the tax year, on your Form 12 if you're a PAYE taxpayer.
 
Thanks Doctor.

Must remember then that when I go to sell the shares I will already of paid my tax on that element of shares given to me as dividends.
 
I don't understand your point. When you sell the only relevant tax is CGT (based on the disposal price less the market price at the time of acquisition etc.). This has nothing to do with income tax (e.g. on dividends).
 
Just to confirm to snowdrop, anyone holding shares in a company on the declared date is entitled to the dividend, anyone purchasing shares between this date and the date the shares go ex dividend will also be entitled to the div. The common time frame would be declare April, go ex div June and pay the dividend in July. The share price would typically reduce by the dividend amount once it goes ex div.
 
Jimbojones said:
The share price would typically reduce by the dividend amount once it goes ex div.
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..which is something the op should bear in mind if he plans on selling as soon as they go ex div. If this is a "quick buck" strategy which this post suggests to me,

Daddy
Found that 20% withholding tax is deducted.

Shares go ex dividend next Wed 27th Feb.

So if I buy before that date I get the dividend I think.

If I wanted to sell my shares on Thursday 28th Feb will I still be entitled to get the dividend cheque ?
Click to expand...
stamp duty, transaction costs and typical ex div prices will ensure the strategy is unlikely to be successful.
 
D'ont assume my query related to a 'quick buck' as if there is anything wrong with it.

My post as at 1.43 p.m does not relate to a 'quick buck'.

I can buy and sell shares in excess of Euro 15k worth for the following transaction costs:

Purchase: .50% comm + 1% stamp duty
Sale: .50% comm.

All in 2% costs.

And if in excess of 30k worth my all in costs purchase and sale 1.8%.

Not excessive in relation to the final dividend which equates to 3.7% gross or net of 41% tax being 2.18%.

Not a bad punt for either the quick buck as you call it or for a longer term strategy for a blue chip company.
 
If you were getting 2.18% on cash deposits over 6 months (or a year?) then this would not be great. I don't really understand your motivation in looking at this to guide you in which shares to invest in rather than looking at the company's fundamentals, prospects for long term dividend payments and capital/revenue growth etc. etc.

If you do mean to buy €15K of shares to benefit from the dividend and then sell soon after then you will almost certainly not get your €15K back!
 
I'm a little confused Daddy. If you hold the AIB Shares before Wed 27th then you will be entitles to the dividend. If you then sell when they go ex div on the 28th you will receive a price roughly equal to Cum Div- Div = Ex Div. Hence in a perfect market no gain...... In the real world you lose out on transaction costs and tax on dividends at highest rate?? This
 
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