You will record one real dividend from announcement to payment and calculate the total return over that period.
Most people can tell you the dividend their stock paid last time. Very few can tell you what they actually made over the same weeks, once the price is counted. Wei Ling could recite her REIT's last distribution to the cent. When she checked, the unit price had fallen by more than the distribution over the same period, and she had been calling a small loss income.
This exercise follows one real payout from the day it was announced to the day the cash arrived, and puts a total return on it. You need about twenty minutes, a spreadsheet or a sheet of paper, and access to SGXNet.
Choose one SGX stock or REIT that you hold or follow, and find its most recent dividend or distribution that has already been paid. A payout that is still pending will leave you without a payment date price, so go back to the last completed one.
If you hold nothing yet, pick any well-known SGX dividend payer you are curious about. The point is the method, not the holding, and nothing in this exercise is a suggestion to buy it.
Open the dividend announcement on SGXNet, or the dividends page of the company's investor relations site. Write down five things: the declaration date, the ex-date, the record date, the payment date and the amount per share. Lesson 1.1, Why the share price drops on the ex-date, explained what each date means. Also note the payout type, using the labels from lesson 1.2, Where dividends come from and how often they are paid.
Your tracker can be one row per payout with these columns:
Company, payout type, amount per share, declaration date, ex-date, record date, payment date, price before the ex-date, price on the ex-date, price on the payment date, price change, dividend, total return
That is the whole tracker. You will add rows to it later in the course.
Look up three closing prices on the SGX website or your broker's chart. The first is the close on the last trading day before the ex-date. That is your starting price, the last price at which a buyer still got the dividend. The second is the close on the ex-date. The third is the close on the payment date.
Use closing prices for all three so they are comparable. If a date fell on a weekend or public holiday, use the last trading day before it and note that you did.
Here is a worked example with made-up figures, so you can check your method before using your own.
Say the dividend is S$0.06 a share. The stock closed at S$2.40 the day before the ex-date, S$2.35 on the ex-date and S$2.44 on the payment date.
First, the price change from the starting price to the payment date. S$2.44 minus S$2.40 is S$0.04. As a percentage of the starting price, S$0.04 divided by S$2.40 is about 1.67%.
Second, the dividend as a percentage of the starting price. S$0.06 divided by S$2.40 is 2.5%.
Third, the total return. Add the two: S$0.04 plus S$0.06 is S$0.10, and S$0.10 divided by S$2.40 is about 4.17%. For someone holding 1,000 shares, that is S$100 over the period, S$40 from the price and S$60 in cash.
Notice the ex-date itself. The price fell from S$2.40 to S$2.35, a drop of S$0.05, close to the S$0.06 dividend but not exactly equal, because other news and trading moved it too. That is the pattern from lesson 1.1, and seeing it in real numbers makes it stick.
Then the price rose by the payment date. That rise had nothing to do with the dividend. It was ordinary market movement, and it could just as easily have gone the other way.
Your real figures will look different. Three results are common, and each teaches something.
The total return may be close to the dividend. That means the price recovered roughly what it lost on the ex-date, and the payout was most of your return over the period.
The total return may be well below the dividend, or negative. That was Wei Ling's case. The price fell further after the ex-date, so the cash she received only partly made up for a lower share price. Her dividend was real, and so was the loss.
Or the total return may be well above the dividend, because the price rose for other reasons. That is good news, but it is not income, and it may not happen next time.
A few weeks is a short window, and one payout proves nothing about the stock. What the exercise builds is the habit of putting the price next to the payout every time. Module 2 extends it to a year and to dividend growth, and module 3 shows what happens when people look at the payout alone.
Now take your own payout through the five steps, and when the row is full, look hard at the gap between the dividend column and the total return column.
Complete the dividend tracker for one real payout and write two sentences on what the total return shows that the dividend alone hides.
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