Dividend

The dividend is the part of the profit that a corporation to its shareholders or a cooperative to its members; which the legislature term dividend is not used, but this is referred to as 2 AktG distributable amount in § 174 paragraph 2 no. When one speaks GmbH instead of a dividend from a dividend.

The distributions of investment funds will sometimes referred to as a " dividend", but this term is incorrect because in the distributions and interest- like income may be included. The distributions of bonus shares of a company are not themselves dividends, but are occasionally linked to the amount of the dividend of one share of the same company.

Decision and payment

The amount of the dividend is proposed by the Board and adopted by the Annual General Meeting by a simple majority ( § 174 para 1 AktG). The dividend payment is usually done the day after the Annual General Meeting. Is decisive for entitlement to a dividend payment in resting stocks, whether the shareholder had booked on the last day before the ex-date, the corresponding share in his securities account. While the so-called record date is not considered in many countries as a date, but in Germany. With floating exchange transactions, the claim after the closing date determined. The last day before the ex-date is the last cum - day or inclusive. The ex-date is usually the payment date, but it does not necessarily have to be. Nevertheless, acquired in such exceptional cases, when you buy from the ex-date is no longer entitled to dividends. In Germany it is common dividend shall be paid only once a year. In other countries, multiple distributions are common to monthly dividend payments. In the U.S., for example, the quarterly total dividend, the common form.

On the ex-date is usually done a discount on the market price in the amount of the gross dividend. One speaks of the " ex dividend " or the fact that the dividend from the course " counted out " is. This must, however, due to other market factors not reflected 1:1 in fact that market participants consider only the distribution, but the price is still about through supply and demand.

Is specified, the dividend usually in monetary unit per unit, ie three euros per share. Sometimes the dividend but is indicated as a percentage of face value. For dividend and stock price, the dividend yield can be calculated.

2006 poured 28 of the 30 DAX companies pay a dividend of 27.9 billion euros. This corresponds on average to a payout of 41 % of corporate profits, with other European companies, the rate is according to the German Association for the Protection of securities owned at about 50 %.

Tax treatment of profit distribution

• Individuals in Germany are taxed on dividends as income from capital assets of withholding tax.
• Sole proprietorships and partnerships tax on the dividends according to the partial -income procedure as above.
• Corporations, dividends tax-free measures ( § 8b para 1 Corporation Tax Act ). Since 2004, however, 5% of the dividend received are fictitious taxable as non-deductible business expenses; de facto 95 % of the dividends of the corporation are therefore exempt. Effective March 2013, the corporation must be involved with at least 10 % of the distributing company, so that the tax exemption attacks. Otherwise, the entire gain is taxable.

For the business tax already existed previously, a minimum participation rate. The dividend beneficiary of the exemption at the beginning of the relevant period of at least 15 % shareholding in the distributing companies (§ 9 No. 2 and 7 TTA ).

Dividends

The Annual General Meeting determines which of the remaining after deduction of corporation tax and the solidarity surcharge earnings will be distributed. Since this is so is tax profit, the term cash dividend as opposed to gross dividends before deduction of any taxes will be used. From this cash dividend but still a tax deduction in the amount of 25 % occurs at the German stock ( plus 5.5 % solidarity surcharge). The dividend is transferred to the associated account a securities portfolio net of tax and any applicable charges. For listed companies, the dividend recipient must be issued by the Custodian paying a tax receipt for the taxes withheld, for non-listed companies are paid and tax receipt directly by the distribution companies.

The dividends were taxed until the end of 2008, domestic passenger normally both in private assets as well as business assets by the half-income method as revenue since 2009 are basically in private flat rate of 25 % a separate tax rate and after the partial-income procedure in investments that attributable to the business assets. It should be noted that the sale of shares, which represent an investment of 1 % or more, are attributable to business income and therefore also subject to the partial -income method.

Case of dividends from foreign shares is often at the Company's withholding tax withheld (depending on country different, often 15%). The investor must the dividend as domestic shares tax, but can be optionally deduct the tax withheld at source in his German tax return of the tax liability or be credited as business expenses from capital assets.

If the recipient of a dividend, a domestic corporation ( eg GmbH, AG ) then the revenue depending on the nature of the investment in another corporation tax-free or taxable.

Performance of the tax reserve account

Is the dividend as a performance from the tax reserve account in accordance with § 27 Corporation Tax Act nF place, the company is required to characterize this distribution as such. This distribution is considered tax-free repayment of the deposits to the shareholders (§ 20 Section 1 Subsection 1 Sentence 3 German Income Tax Act ) and reduces the cost. It is not taxable income and is therefore subject neither to a tax deduction equal to 25 % and income tax; it is created in the credit institutions and reported to the tax office tax certificate submitted, however, the income tax return is not indicated in the KAP.

Dividend yield

The dividend yield (English: Dividend yield ) is the dividend expressed as a percentage of share price:

She is one of the classic indicators for assessing a stock. The dividend yields of DAX stocks are usually between 2% and 3%. Background of this ratio is that high in magnitude dividend can bring less yield than a low in magnitude dividend. The dividend yield is distinguished from the shareholder return. While the dividend yield the ratio of the dividend describes the current price, the stock return is a measure of how evolved the value of an equity exposure over time and takes into account both the costs incurred during the period dividends as well as the possibly occurring rate changes. One speaks in this combination of price development and dividend yield also by the performance of a share (note at this point: the German stock index DAX is a performance index, the U.S. Dow Jones does not, however ). The published dividend yields usually refer to the company by the relevant last paid dividend to the shareholders and the current share price. For an investor who bought the stock cheaper than the current price, thus increasing his personal dividend yield and vice versa. The DivDAX share index consists of 15 joint-stock companies of the DAX with the highest dividend yield.

Example:

Three euro dividend per share at 55 euros ( equivalent to a dividend yield of 5.5 % ) is better than six euros to 125 euros per share dividend ( dividend yield of 4.8%).

Example:

A stock was purchased at 20 €. The current price is 43 euros and the current dividend 2 euros per share. Then the published dividend yield and the personal dividend yield.

Dividend policy

Dividends are considered as an indicator of the economic strength of a company.

Ideally, a company should have its annual dividend assessed according to which part of his income can not use it for investment or debt repayment ( interest, amortization ). This proportion varies from case to case. Companies that are growing strongly, want to deleverage or have high investment needs to maintain its competitive position, pour a rule of no or only a small dividend. Can a business, however, no longer grow or does it make little investment for its operation, it may, if no acquisitions are planned, practical distribute its profits after interest and tax as a dividend. This exhibit companies in the second category often relatively high dividend yields, although not necessarily behind a higher profit or even a more profitable company stands for. In the first category often fall technology companies in the second category, for example utilities.

It occasionally happens that the current dividend does not coincide with the company's business success. For example, reinsurance companies have to contend with the fact that on average about every five years, resulting in significant natural disasters that erode the gains otherwise achieved. In order to " stick to it " in such fiscal years, the shareholders, the dividend will continue to be paid normally in full. This is usually not to the detriment of the company, because reinsurers are prepared for such cases of business due.

Dividend in kind

May be distributed not only money, but also economic goods ( § 174 Section 2 No. 2 AktG) or shares of subsidiaries ( § 58 para 5 AktG).

Stock dividend

From a stock dividend occurs when the dividend payment will be made not by cash but by the issue of free shares.

Bankruptcy Legal term

In the Swiss parlance, the term of the bankruptcy dividend referred to, inter alia, also the amount the creditor receives for its call for guided through bankruptcy.