Noob question about stocks

Oneball

Member
Messages
11,075
The dividend will change year on year as will the share price so the 6% will have been the most recent and may not be the same next year.
 

MarkMas

Chief pedant
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8,796
So if a stock has a dividend yeild of 6% that means if I bought 100k worth I'd get 6k annually?

I think so.

But as Oneball says, it's historical, so not:
If a stock has a dividend yield of 6% that means if I bought 100k worth I'd get 6k annually.
but more like:
If you bought £100k worth and then got a dividend of £6k, your yield would turn out to have been 6%.

This is my go-to resource:

For example:
 
Messages
493
Cool thanks.

If I tell him he will. He helps himself to my salary and will help himself to my pittance of a pension when I get it... so I might forget.
 

Phil the Brit

Member
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1,499
On our self assessment tax returns, if myself and my wife enter half the profit from a sale of a property each, is that better than me taking all the load and the wife none of it? (profit from sale of buy to let was £35K).
 

dgmx5

Member
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1,142
On our self assessment tax returns, if myself and my wife enter half the profit from a sale of a property each, is that better than me taking all the load and the wife none of it? (profit from sale of buy to let was £35K).

Depends on your respective rates of tax you pay and how much of your thresholds you have already used. Too little information to be able to say.
 

dgmx5

Member
Messages
1,142
Dividends should be counted as income for tax purposes as far as I know?

That is correct, dividends are treated as income and will be taxable (subject to them not being dividends for a stock held in an ISA etc or that you have not yet used up your personal allowance for the year (unlikely if you are employed).
 

dgmx5

Member
Messages
1,142
So if a stock has a dividend yeild of 6% that means if I bought 100k worth I'd get 6k annually?

But when you read of such dividend yields (anything above a couple of %), they often reflect that the last dividend declared was when the share price was low.

So a company may declare a 30p dividend when the share price was 500p (6%) but it may be the case that even where the SP rises to 1000p the following year, the dividend remains at 30p (now only 3%). 6% is not bad.

Oh, and once the dividend is declared you might see the stock price drop more than 6%. If you are long term holding, that may not be a concern but something to remember.
 

O37

Member
Messages
101
Tax free allowance on dividends is £2000

6 April 2021 to 5 April 2022£2,000

then depending on the holders tax band you will be charged the following,

Tax bandTax rate on dividends over the allowance
Basic rate7.5%
Higher rate32.5%
Additional rate38.1%

You can transfer part holding to spouse / partner etc which may gain further £2000 tax allowance "free" or reduce the rate of tax above that, I'm assuming you are in the UK purchasing UK equities.

If taking the long term approach - Open an Stocks and Shares ISA - place £20,000 per person into it <each financial year> and get tax free dividend from any purchased share, typical ISA fees £10 / month, see interactive investor and other platforms etc.

If interested take a look at Royal Mail today, second day after ex-dividend date, the share dropped more than the dividend but recovered above. Value shares like these where investors take the dividend, do not usually lend themselves to trading, the capital is left to the cyclic influences of the wider market. My advice is to review the company carefully and I'd stick to FTSE100 companies with a strong forward trading statement, that will be available from the last set of results.
 
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Phil the Brit

Member
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1,499
Depends on your respective rates of tax you pay and how much of your thresholds you have already used. Too little information to be able to say.

Basic rate taxpayer, already used up £9500 of thresholds each.
Also is there not a £12300 relief on CGT. Is that for each of us if we declare the CGT half each?
Any further advise very welcome.
For full disclosure I do our tax returns myself nowadays.
 

dgmx5

Member
Messages
1,142
Basic rate taxpayer, already used up £9500 of thresholds each.
Also is there not a £12300 relief on CGT. Is that for each of us if we declare the CGT half each?
Any further advise very welcome.
For full disclosure I do our tax returns myself nowadays.

Hi Phil

I am not an accountant. Given the very speciifc circumstances, I think it would be cost effective for you to obtain professional advice. You will probably be asked whether or not you plan to make any further chargeable gains disposals in the same tax year as that may influence your decision.
 

O37

Member
Messages
101
Basic rate taxpayer, already used up £9500 of thresholds each.
Also is there not a £12300 relief on CGT. Is that for each of us if we declare the CGT half each?
Any further advise very welcome.
For full disclosure I do our tax returns myself nowadays.

not a big fan of cut and paste from Google but they do answer some of your questions

presume we’re still talking equities, so 24k for a couple, any shares you hold less than you paid you could offset gains if above the CGT limit by selling this financial year and crystallising the loss, caveat fees incurred to repurchase

https://www.brewin.co.uk/insights/ten-ways-reduce-your-cgt-liability