As an investor you are eligible for an offer to share a company’s profit if you own their stocks. Delivering a profit is a way to reward shareholders. For some investors, one of the criteria in choosing shares is whether a company delivers profits and the size of those profits.

With ongoing volatility, investors such as self-funded retirees are looking to dividends to drive income. Fortunately, the dividend yield on the Australian Securities Exchange is approximately twice the world average and the highest in the G20 (after Russia).

When comparing the ASX to the largest market in the world, the US S&P 500, the payout ratio for Australia – the amount of profit a company is giving back to shareholders in dividends – is about 68 per cent on average and within the rang of 56-82 percent long-term.

Upcoming Dividend

The following table shows you the company has ex-dividend date as of today and tomorrow. If you want to see the complete list of incoming dividend, please go to this page. A day before ex-dividend is the cut off time to be qualified for dividend. More details about the key dividend dates will follow below. Share price will be impacted based on the fact it is ex-dividend day.

Dividend History

In Australia many company rewards their investors by paying dividend twice a year.  According to our research, since 2010, more than a thousand company or entities have recorded dividend payment. Dividend history only tell you the past dividend payout, it won’t tell you the company’s future profit guideline. But if a company has a good record of consistent dividend payment over many years, that is a healthy sign for this company. Click here to find out a company’s dividend history details. In general, a lot of companies in ASX 50 list, ASX 100 list, ASX 200 list or even ASX 300 list have good record of consistent dividend payment history.

Dividend Dates

If you own any dividend stocks or before purchasing stocks, it’s important to understand the following key terminologies related to share dividend:

Record Date

The record date is the cut-off date built up by the organization to figure out which investors are qualified to get a dividend. A shareholder must be on the organization’s investor record on this date to get the dividend.

In Australia, the record date is 5.00pm (AEST) on the date a company closes its share register to determine dividend entitlement.

Ex-Dividend Date

The ex-dividend date, also known as the ex-date, ex-entitlement date, occurs one business day before the company’s record Date. This is due to T+1 settlement schedule which means you buy or sell a stock; the trade takes one business day to settle.

If you purchase and hold a security before its ex-dividend date, you will receive the next dividend. Reversely, if you purchase shares on or after that date, the previous owner of the shares (and not you) is entitled to the dividend.

It is important to remember: if you buy the shares on the ex-dividend date, you are not eligible to receive the dividend.

Payment Date

Payment date or payable date is the date shareholders with dividend entitlement will receive the dividend payment.

Dividend Yield

Dividend yield refers to a stock’s annual dividend payments to shareholders, presented as a percentage of the stock’s current price. The formula is: Dividend Yield = Annual Dividend / Current Stock Price x 100

Franking Credit and Percentage

According to Australian Tax Office (ATO), franking credits represent the tax a company has already paid on any profit it distributes to shareholders as a dividend. The extent to which an entity has allocated franking credits to a frankable distribution is referred to as the franking percentage. This is calculated by dividing the franking credit allocated to the distribution by the maximum franking credit that may be allocated to the distribution.

• Fully franked – 30% tax has already been paid before the investor receives the dividend.
• Partly franked – 30% tax has already been paid on PART of the dividend.
• Unfranked – No tax has been paid.

Franking Credit Calculation

Let’s use some examples to further explain the dividend terminologies mentioned above:

Company A:

Ex-dividend Date: 15/03/2020

Record Date: 16/03/2020

Payment Date: 04/05/2020

Franking (%): 100%

Dividend: $70 per share.

That means that a shareholder who purchased Company A stock prior to the ex-date of 15/03 was entitled to the dividend, and conversely a new shareholder who purchased Intel stock after 15/03 was not. On 04/05 this shareholder will receive $70 per share.

Franking at 100% means this company already paid 30% of $100 ($30) per share tax before distributing $70 per share as dividend to shareholders.

When it is time to lodge tax return for this dividend item, the following calculation shows how franking percentage applied in different marginal tax rate scenarios:

Marginal Tax Rate at: 15%, 30% and 50%

Remember before you receive the dividend, company already paid 30% tax. You tax rate is at 15% so you should get tax return.

To calculate how much return you will get, we need to go back one step to get the original tax payable dividend: $70 + $30 (Franking Credit) = $100, and then calculate what tax actually should apply based on your tax rate.  Then work out the difference.

Tax already pay: $30

Tax should pay: $100×15% = $15.

$30-$15 = $15 tax back.

Similarly, at marginal tax rate of 30%, $100×30%= $30. That is the same tax rate company A paid. $30 – $30 = $0. That is why you won’t get any tax return.

Looking at 50% marginal tax rate, $30 – $100×50% = -$20, so you actually need to pay $20 back to ATO.

A general rule of thumb is: if the company already paid tax at a higher rate than your marginal tax rate, you will receive tax return. Conversely, you are liable for paying tax difference on the dividend you receive.