How dividends are calculated

If a company or exchange-traded fund (ETF) decides to pay out a dividend, generally the total dollar amount that the company or ETF pays out is divided by the number of shares. How much you get depends on how many shares (companies) or units (ETFs) of that investment you owned on the date that dividends are calculated—this is called the 'ex-dividend' date.

Dividend payments for American depositary receipts (ADRs) are calculated on the amount of receipts you owned on the ex-dividend date.

Ex-dividend date

If you own shares, units, or receipts in an investment before and on the ex-dividend date, you’re entitled to the next dividend payment. If you invested on the ex-dividend date, or after, the next dividend payment would be paid to the previous owner of the shares, units, or receipts.

For example: when you buy a share, there’s someone selling a share on the other side of the trade. If the ex-dividend date is 31 August, and you buy the share on this date, the dividend belongs to the seller. If you’d made the purchase on 30 August, the dividend would be paid to you.

Gross dividend yield (GDY)

The gross dividend yield (GDY) is all of the dividend payments for the past year per share divided by the current share (or unit) price, and then shown as a percentage. It’s important to remember that past performance does not guarantee future returns—this applies for dividends as well. But, the GDY percentage can show you a representation of the historical returns in relation to the current share or unit price.

When dividends are paid

Not all investments pay regular dividends. They might decide to reinvest the money instead of paying it out as a dividend. Sometimes they choose not to pay dividends at all.

Tax on dividends

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