Over the past few days your timeline was probably flooded with beautiful screenshots of dividend notifications 🤑 You may also have seen #DividendStockvel and/or #DividendWatch2021

Cc @keletsovionah @lati_____

What is a dividend? Is it free money?

A thread… 🧵
A dividend is a share of the profits paid by a company to its shareholders. A company can choose to pay dividends monthly, quarterly, twice a year or annually. South African dividend paying stocks often pay dividends twice a year (an interim and a final dividend).
Many US dividend paying stocks pay dividends quarterly. ETFs usually pay dividends quarterly or twice a year although some US ETFs pay monthly and others annually. Just remember that dividends are not guaranteed…
if a company or ETF issuer has been paying dividends for 12 years there is no assurance that they will continue to pay dividends for another 12 years.

By paying a dividend a company foregoes the opportunity of reinvesting that money in its research and development.
Therefore it’s a fallacy to claim that a dividend is free money.

1 - You needed to own the said stock or ETF by the last trading day to qualify for a dividend.
2 - It’s money that the company could have invested differently in the business but chose to forego that opportunity and rather distribute a portion of the profits to shareholders as dividends.
That said there are many companies that have earned the title of Dividend Aristocrat or Dividend King. A Dividend Aristocrat is a company that has increased their dividends for at least 25 consecutive years 🤩 and is part of the S&P 500, examples are $ABBV, $CAT and $T
A Dividend King is a company that has increased their dividends for at least 50 consecutive years 👑 examples are $KO, $PG and $JNJ

Not all Dividend Kings are Dividend Aristocrats, a Dividend King does not need to be in the S&P 500 while a Dividend Arisocrat must be.
The dividend yield (DY) which is expressed as a percentage, refers to the annual dividend. The DY = annual value of the dividend per share / current share price. Let’s say the Current share price of Pinky’s Pink Water Bottles is R45 per share and the annual dividend is R1.20…
then the DY will be 2.6% (R1.20/R45). If Pink Water Bottles pays dividends quarterly, the DY remains 2.6% and the annual dividend remains R1.20 however the R1.20 will be divided by 4 therefore each quarter the shareholders (you and I) will receive R0.30 per share before tax.
The dividend amount is always pre-tax, as a shareholder you need to subtract the tax in order to determine the Rand amount that will land in your bank account or investment account. The South African dividend withholding tax for residents is 20%.
South African residents pay a 15% dividend withholding tax on US dividends, this may differ for non-South African residents who invest through a South African brokerage, please double check the tax treaty for your country.
Some benefits of dividend paying stocks is that even during recessions they’ve been resilient and continued to pay dividends. Dividend Aristocrats and Kings have continued to increase their dividends through the worst economic times.
Between 1980 and 2019, 75% of the S&P 500 returns came from dividends 🤯 This shows the power of reinvesting the dividends in order to allow compounding to work for you. This means that investors realised higher returns than would have been the case without dividends.
Dividends are often a good indicator or a company’s financial position, a cash strapped company cannot pay dividends. Dividends are a form of real returns on your investments without you having to sell your shares to realise a profit.
There are many great and free or low-cost resources that you can use to check when a stock or ETF is paying dividends or to check the dividend history of a stock or ETF.

South African resources I use:

US resources I use:

A friendly reminder that you should not invest only for the dividend (or special dividend 👿), you should still do your due diligence and research the stock or ETF thoroughly. Thabang’s thread will help you get started with DYOR (doing your own research):
Please keep sharing your dividend screenshots and use #DividendStockvel and #DividendWatch2021 we all need the motivation and encouragement 🤩

@lati_____ @keletsovionah and I want to celebrate with everyone who shares their dividend notifications so keep them coming 🥳🥳

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More from @pinkysithole17

21 Jul
The last 2 editions of the #SevenFiguresQuiz were focused on JSE listed stocks, yesterday’s focus was specifically on the JSE Top 40.

I would like to share some info regarding the JSE Top 40.

A thread… 🧵
The JSE Top 40 is made up of the top 41 companies by market cap.

To calculate a company’s market cap, multiply the total number of a company's outstanding shares by the current share price of one share.
The current JSE Top 40 companies are:
BHP Group Plc
Compagnie Financiere
Mtn Group
Mondi Plc
Sibanye Stillwater Ltd
British American Tobacco
Anglo Gold Ashanti
Goldfields Ltd
Bid Corp Ltd
Absa Group Ltd
Read 9 tweets
20 Jul
How well do you know the JSE Top 40 👀

Please try the #SevenFiguresQuiz 😈 without using a search engine or checking your portfolios.
Which company is the largest by market cap?
Which bank is the largest by market cap?
Read 6 tweets
18 Jun
Medical aid is a very emotive topic.

Some medical scheme options are quite complex, options within the same medical scheme may have different rules and different benefit structures across medical schemes make it difficult compare the many options on offer.

A thread…🧵
Having said that I do want to address the issue of the Medical Savings Account (MSA) clawback in light of mid-year contribution increases and mid-year option changes.

📢 📢
I do not work for a medical scheme or administrator. I have no affiliation to any medical scheme.
Medical aid, Medical aid scheme and Medical scheme all mean the same thing. These terms are used interchangeably in the industry.

Medical scheme plan and Medical scheme option mean the same thing. Plan and Option are used interchangeably in the industry.
Read 24 tweets
27 Jul 20
The amazing power of compounding 💸💸

Compounding is when your savings generate additional earnings for you over a period of time. Huh??

A thread 👇🏾

Simply put, compounding is the growth of your savings.

This growth is the interest earned on the amount saved; each month you earn interest on the initial amount plus the interest already earned (your money increases over time with very little action required from you).
Compounding in action:

Let's say I save R1200 on 1 Jan, the bank offers me an interest rate of 6% per annum. A simple interest calculation tells me that I will have R1272 at the end of the year. But come 31 Dec I will actually have R1274.01 🥳🥳
Read 10 tweets

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