Wealthy Maths: Calculating dividends

In Latest, Wealthy Maths by Kristia van Heerden

Dividends are one of the best parts of investing. There is just something about increasing your wealth with “free money” that gets people really excited and keeps them motivated.

If you own any dividend-paying shares or ETFs, you probably keep your eyes and ears open for the next dividend payout. This article will show you how to calculate the value of the dividend payout you will be getting.

Whenever a company or an ETF declares a dividend, the amount will be given in cents per share/unit. For example, the Satrix 40 dividend that paid out in July, was 46.1c per share.

So how do you use this information to calculate the value of the total dividend you will receive? The formula is as follows:

Let’s use an example to see how the formula works.

First up, you need two pieces of information. The first is the dividend amount in cents per share. Using our Satrix 40 example, the amount is 46.1c/share.

The second value is the total number of shares held. You can find this on your brokerage account. If you struggle to find it, you can also request this information. 

For this example, let’s say we held 192 Satrix 40 ETF units.

Now we can calculate the total dividend payout we will receive:

It’s important to remember that the value you get is in cents (because the dividend amount is given as cents per share). To get the rand value of the total dividend, divide by 100 (since there are 100c in one rand).

So, in this example, you would get a total of R88.51 worth of dividends.

And one final important point: Tax. This amount will be before tax, and it may be subject to dividends withholding tax and/or income tax, depending on the type of investment that paid the dividend. The Tax Elves wrote a blog about it, so please click here to find out more.

Our friend Stealthy Wealth knows his way around maths. Luckily for us he also speaks human, which is why we asked him to explain the most important maths we need to know to be good at money. This is not your average maths class. Tune in once a month and turn into a money mathemagician.

http://www.stealthywealth.co.za/

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