Core points
The dividend is the interest on the stock. Whether and how much the dividend is paid is related to the company's operation and dividend policy, usually on a quarterly, semi-annual and annual basis, and a special dividend may be paid at any time.
Dividends are usually paid in the form of cash or stock
There are four important dates for dividend distribution: announcement date, clearance date, registration date, and distribution date.
Dividend tax on Hong Kong stocks-dividends paid by companies registered in Hong Kong are not taxed, and dividends paid by companies not registered in Hong Kong may be taxed; dividend tax on US stocks-10% for mainland Chinese residents and 30% for residents in other regions
Detailed explanation of concept
Money has time value, so lending money in a formal way, or using it to buy wealth management products, usually earns interest. What if you invest in stocks? In fact, there is also interest.
The interest on a stock is called a dividend. In addition to the bid-ask spread in stock investment, another important source of income is dividend. This is the income distributed to shareholders by listed companies after deducting the provident fund used as reserve and the public welfare fund as employee welfare in the after-tax profits.
Companies can pay dividends or not; they can pay more or less. This is affected by the operation of the company, but also related to the dividend policy of the company.
The number and timing of dividends are often related to the time when the company announces its profits, so it is usually paid out quarterly, semi-annual or annual.
However, if a company makes money through investment or other means outside its main business, it can also pay a dividend at any time, which is called a special dividend.
Form of distribution
There are two main ways to distribute dividends: cash dividend and stock dividend.
Cash dividend: for example, Company A declares a dividend of 0.30 yuan per share. If you own 1000 shares of Company A, you can receive a cash dividend of 300 yuan. You can keep the cash or reinvest it.
Stock dividend: for example, Company B declares a stock dividend of 4%. If you own 500 shares of the company, you can get a dividend of 20 shares. If you are optimistic about the future development of the company, the stock dividend gives you a chance to get a greater return.
Four dates
With regard to the dividend payout, there are four dates to pay attention to.
Announcement date: on this day, the company announces the dividend distribution information, including the timing, the number of dividends, the relevant terms and conditions, etc.
Clean-up day: those who hold shares before this day can receive this dividend; those held on or after the same day will not receive this dividend. If a cash dividend is paid, the opening price of the day will be minus the amount of the dividend per share; if the stock dividend is paid, the corresponding equity structure will be changed that day.
Registration date: the company determines the list of shareholders who can receive dividends on this day, usually within 2 working days after the clean-up date.
Payout date: the company pays dividends on this day.
Dividend tax
Dividends often have to be taxed, and investors in different markets and regions have different rates of taxation.
In the Hong Kong stock market, if the dividend-paying company is registered in Hong Kong, shareholders do not have to pay dividend tax. If a dividend-paying company is not registered in Hong Kong, its place of registration may be taxed to shareholders such as Hong Kong residents and foreigners, with different proportions.
According to the US stock market, the dividend tax rate for mainland Chinese is generally 10 per cent, while that for Hong Kong and other residents is generally 30 per cent.
