Dividend Payments

BigSpenderLittleSpender

Can someone please tell me how you calculate a monthly dividend payment on an investment?

Thanks

eskbanker

Investments that pay dividends typically do so annually, biannually or quarterly, and data about these is widely available alongside other information about the investment - a yield figure is usually included, which is the annual dividend total as a percentage, which you could divide by 12 if you're looking for a monthly equivalent?  If you're looking for something else, perhaps worth explaining in more detail, together with which investment(s) you're actually referring to....

BigSpenderLittleSpender

As a hypothetical example, if I buy £1000 of funds at £10 a share giving me 100 shares and these shares have a monthly yield of 4% how much would I be paid per month?

eskbanker

BigSpenderLittleSpender said:

As a hypothetical example, if I buy £1000 of funds at £10 a share giving me 100 shares and these shares have a monthly yield of 4% how much would I be paid per month?

You'd get 4% of the current market price, so £40 if the value was static, but a monthly yield of that scale is an unrealistic expectation!  High income investments might yield 4% per annum....

Notepad_Phil

BigSpenderLittleSpender said:

As a hypothetical example, if I buy £1000 of funds at £10 a share giving me 100 shares and these shares have a monthly yield of 4% how much would I be paid per month?

Dividend yield is a backwards looking view of how much has been paid out over the last year divided by the current price.

So assuming that you really meant 4% per year then you'd be looking at £40 - but a company is always free to alter how much of a dividend they will pay out over the next year, so you have no guarantee that you'll get £40 over the next year - it could even go to £0, it wouldn't be the first time that has happened.

And even if they did continue to pay out their dividends at the same value, the yield would go up or down depending on what the share price was - e.g. if the share price doubles then the yield would actually go down to 2% i.e. £40 / £2000 = 2%

Please be very careful if you are thinking of investing in high yield shares as it is not the easy path to riches that many people may at first believe it to be. There can be many reasons why a high yield is an indication of problems with that company rather than a reason to buy.

BigSpenderLittleSpender

Not planning to buy shares just trying to figure out how the monthly payments I receive from some funds are calculated

Thrugelmir

What funds do you hold? 

BigSpenderLittleSpender

Thrugelmir said:

What funds do you hold? 

Thrugelmir said:

What funds do you hold? 

I'm just interested in the general calculation

Thrugelmir

BigSpenderLittleSpender said:

Thrugelmir said:

What funds do you hold? 

Thrugelmir said:

What funds do you hold? 

I'm just interested in the general calculation

There's few funds that I know of that even pay monthly dividends or income distributions. 

BigSpenderLittleSpender

Thrugelmir said:

There's few funds that I know of that even pay monthly dividends or income distributions. 

I hope I have the correct terminology or is it perhaps interest rather than dividend payment, but there are a few such monthly paying funds out there.

wmb194

BigSpenderLittleSpender said:

Thrugelmir said:

There's few funds that I know of that even pay monthly dividends or income distributions. 

I hope I have the correct terminology or is it perhaps interest rather than dividend payment, but there are a few such monthly paying funds out there.

The funds (OEICs) and investment companies e.g., LSE:NBMI which pay monthly are usually predominantly invested in fixed income debt securities so their distributions are classified as interest but there are a few which are predominantly invested in equities and they're classed as dividends. HMRC has a percentage to use which I forget but your broker/fund manager should communicate correctly how the distribution should be classified.

With these sorts of funds the monthly payout will vary but if you look at their distribution histories you can start to make an educated guess. Trustnet and Fidelity are examples of sites which will give you these.
Example of a predominantly fixed income, monthly paying OEIC classed as interest. See the "dividends" tab but note it has a "tax indicator" with each distribution: https://www.trustnet.com/factsheets/o/k63o/invesco-monthly-income-plus-uk-y-inc

Example of an equities fund paying monthly, see the "dividends" tab: https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BYSYZP12-Fidelity-Enhanced-Income-Fund-W-MINC-GBP/dividends