[geewilickers]

Hello,

I'm a complete newbie when it comes to stocks. I've done a lot of reading in the past 2-3 years but haven't mustered enough courage yet to actually start. Aside from basic index funds, I would like to start with dividends, because they pay quarterly, from my understanding. I do have a few questions regarding dividends.

Some things I'm a bit confused about is how dividends are paid out and at what frequency. If you look at the bank of ireland (http://www.google.com/finance?q=NYSE:IRE), according to google, it only shows the dividends it payed since May 2008, is that because they aren't paying out or because google isn't tracking it?

What influences the dividend price? A few days ago it was at 80% now its at 53% for bank of ireland. I understand that the stock price goes up and down, but where is the dividend price listed?

RBC also offers a dividend fund, how would that work? Do they average out the dividends per quarter and pay them out?

As for index funds, is it best to signup for an scotia-itrade account and get a basic S&P 500 index like SPY, or could anyone offer a better broker or index fund?

Thanks!

 

[CJB]

Welcome to the forum of enlightenment! First of all, it is great to hear you are taking a disciplined approach to investing.

As far as your question about that google finance page re: bank of Ireland, it only shows dividends since may since that is the time period that the chart defaults to. If you stretch the bar just below the graph all the way to the left you can see back to 1997 and all the dividends (and split in 1999).

What influences dividend price? The board. More importantly, how profitable the company is (more profits = higher dividends, generally).

Now, when you say 80%, you are talking about the YIELD (%) not the PRICE ($) of the dividend. If you look on the page where it says "Dividend: 2.46 " , that is the PRICE as a dollar amount distributed during the fiscal year ($2.46 per share over 12 months, or $0.615 per quarter). This number represented as a percentage of the share price is called the dividend YIELD. Simple calculation being dividend PRICE($)/price of stock($)=YIELD.

The YIELD will change day to day based on the price of the stock. If the stock goes up and the dividend remains the same, the YIELD will go down. Also, changes in dividend distribution have an impact.

Hope that helps. I'll let others with more gravitas join in.

 

[FrugalTrader]

Dividends are typically paid quarterly, but income trust distributions are commonly paid monthly.

So if a company is paying $1 / share in dividends/year, then you would get $0.25/share / quarter.

As well, another thing to note is taxation. If you invest in a taxable account (ie. outside your rrsp/tfsa), foreign dividends are taxed at your marginal rate. Whereas if you invested in Canadian dividends, you would be taxed less due to the dividend tax credit.

 

[CanadianCapitalist]

Some things I'm a bit confused about is how dividends are paid out and at what frequency. If you look at the bank of ireland (http://www.google.com/finance?q=NYSE:IRE), according to google, it only shows the dividends it payed since May 2008, is that because they aren't paying out or because google isn't tracking it?

I don't follow IRE specifically, so can't comment on it. Dividends by US and Canadian companies (i.e. companies headquartered in North America, not just listed in a North American exchange) typically pay out dividends every quarter.

IRE might simply be inter-listed in an US exchange as a ADR. A lot of ADRs pay out dividends annually and IRE might be one among them.

As for index funds, is it best to signup for an scotia-itrade account and get a basic S&P 500 index like SPY, or could anyone offer a better broker or index fund?

I've written a lot of posts on index funds and passive investing. You may want to check out the appropriate categories on the blog:

http://www.canadiancapitalist.com/category/investing/

 

[Retired at 31]

Google finance for Canada seems spotty with some info - tsx.com is a better site for accurate info regarding dividends, yields, etc.

 

[kayo]

I find that cbc's money section has pretty good information, if you search for a particular stock, it tells you the dividend amount, the ex date, and the dividend yield. That can be a starting place for you.

 

[geewilickers]

Thank you very much for your help. You have all been very helpful and have cleared some of my assumptions.

FrugalTrader, you mention that income trust distributions pay monthly. What is the difference between an income trust distribution and a dividend distribution? How are they able to pay out monthly? Is a dividend the only vehicle that pays out to their shareholders or are there other vehicles?

Thanks again!

 

[FrugalTrader]

Thank you very much for your help. You have all been very helpful and have cleared some of my assumptions.

FrugalTrader, you mention that income trust distributions pay monthly. What is the difference between an income trust distribution and a dividend distribution? How are they able to pay out monthly? Is a dividend the only vehicle that pays out to their shareholders or are there other vehicles?

Thanks again!

Here is more information on income trust distributions. Basically, income trust distributions consist of return of capital, capital gains, dividends and interest (other income).