There is one element in capitalism that I consider the most important.
That’s ‘cash flow’. Only sustained ‘cash flow’ can sustain the right investment and improve profitability.
Today, let’s learn how to receive dividends, which is a ‘cash flow’ that can be created with stocks, and why dividends are important!
What is Dividend?
There are many reasons to invest in stocks. For example, there is an investment aimed at profiting from market capitalization. Buying when the stock price is low and selling it when the stock price is high is called capital appreciation.
However, such capital appreciation-type investments do not create ‘cash flow’. 주식 배당금 받는법
A structure to make money is formed only when the stock price rises. However, ‘dividend investment’ is an investment that can make money continuously regardless of the stock price.
Dividends can be said to be ‘money paid out of the company’s profits for shareholders’ by the company issuing the stock. The profit referred to here will include profits from business and other capital gains.
A shareholder is like owning a part of the company, but think of it as giving a certain reward to the shareholders who own the company.
So, can all the dividends be paid to shareholders? Or the question arises as to whether all companies pay dividends.
The answer is ‘every case is different’.
Not all companies pay dividends, and in many cases, dividends are paid by shareholder-friendly companies or business models that accumulate profits and do not reinvest. Paintooth
Terms related to dividends and whether or not dividends are paid
We’ve covered dividends briefly, but there are some terms you need to know to actually receive dividends.
First, there is the dividend base date. The dividend base date can be expressed as ‘determining the subject to pay dividends based on a specific date’, which means that dividends are paid based on this date.
The dividend base date is usually the end of the quarter or the end of the semi-annual period.
For example, if the dividend base date is June 30, 2022, you must purchase the stock before June 30 to receive the dividend. However, it takes -2 business days to actually buy it, so you have to buy it by June 28, 2022.
Dividend base date -1 business day is called ex-dividend date.
In order to receive dividends from companies whose dividend base date is June 30, 2022, they must actually purchase by June 28, 2022 to receive dividends.
Let’s take a closer look through a real case study.
The above is an excerpt from the announcement of SK hynix’s decision to close the shareholders’ list. In other words, SK hynix sets June 30, 2022 as the dividend base date, and pays dividends only to registered shareholders.
Above is the announcement of SK Hynix’s cash dividend decision, which is more clearly stated. Dividend classification indicates quarterly/half-year/settlement, etc. Dividend types are divided into cash dividends and stock dividends.
Dividend per share refers to the dividend paid per share of the stock held, and the dividend base date we studied is well written.
For reference, the above disclosure can be checked on the electronic disclosure system (Dart).
So, do all companies pay dividends? Not like that.
The most convenient way to look at companies that pay dividends is to check through Naver Finance. If you search SK hynix on Naver Finance and Finance, you will find charts and basic information.
In the lower right corner, the dividend yield is 1.64%, which means that most companies pay dividends.
The reason for expressing “most” is that the dividend payment history is in the past, and it is unknown whether or not it will be paid in the future.
Dividend yield is the rate of return that can be received per share by dividing the current stock price and dividends. To put it simply, it is the concept of interest that can be received when holding for one year (dividend yield = market dividend rate).
It is a concept that we often express as a percentage of interest when we pick up a deposit product. However, each company has different types of payments, such as quarterly (every 3 months), semi-annual (every 6 months), and settlement of accounts (every year), so whether the dividend yield above is split and paid varies from company to company.
In the case of SK Hynix, the first quarterly dividend was implemented this year, so it can be said that the dividend yield is divided into quarters and comes in once every three months.
Another concept that appears here is the ‘dividend ratio’. In order to understand the dividend payout ratio, it is necessary to briefly understand the profit and loss structure of a company.
All the money received by the company from selling goods is counted as ‘sales’. Among these sales, the cost of manufacturing the product is called ‘cost of sales’, and operating profit is the amount obtained by deducting cost of sales and SG&A from sales.
‘Net Income’ is what excludes various expenses such as operating profit and corporate tax.
For example, SK Hynix generated 9.6 trillion won in net profit, which can be interpreted as paying 11.03% of dividends.
How to receive dividends
If you understood the above clearly, you would have understood how to receive dividends.
The correct answer is ‘just buy and hold before the dividend base date’. Dividends are then deposited into your stock account. The timing of deposit also differs from company to company.
You can use this to generate continuous cash flow on a quarterly basis, or you can use this cash flow to buy another stock or reinvest in the same company.
It is not difficult to receive dividends, but basic terms such as dividend payout ratio, dividend yield, dividend base date, and ex-dividend date must be known and purchased to avoid confusion.
When investing in dividend stocks, it is necessary to examine whether the dividend has been paid consistently and whether the dividend payout ratio has been properly formed.
As with any investment, there is no guarantee that it has been so in the future. The same goes for dividends.
Today, I learned how to receive stock dividends, but I don’t think anyone knows about dividends. However, it is necessary to clearly understand the terms related to dividends and invest in dividend stocks.
Next time, we will learn how to select a dividend stock that pays a steady dividend and how to check the dividend payment date.
Thanks for reading the article. fight