Dividend Terms, Metrics, and Rules

[jbuzz]

As a non-pro investor, I pretty much always feel behind the curve on keeping up with all the terms and technical stuff. 

I was trying to make sense of the old CCC list by David Fish - it became apparent I needed to review.

Googling all over the place for all the info one bit at a time was a pain, so, I asked AI to do it.  

After some iteration, here is the result: 
https://ngsstocktracker.s3.us-west-2.ama...unity.html

In typical AI form, it added some stuff I didn't really ask for - but left it in - since it might still be of interest to some.

Maybe you'll get some value from it.

I can update if anyone finds omissions, lies, etc.

[Dividend Watcher]

Sorry I took so long to reply, I sprained my ankle and then had to take a short, pre-arranged getaway trip. I ignored my computer for most of the time as I was just struggling getting around on one leg for a while.

Interesting list. Most of the answers are technically correct but some answers are incomplete or do not match the typical usage you'll see on some web sites and/or analysts discussions. Some are just what was written on Mr. Fish's 'Notes' tab in the CCC list.

Some of my thoughts:

Indicated Dividend - (not shown on the list) typically listed as the rate of the last dividend payment times the typical frequency for the company. Could also be the upcoming dividend payment as shown in the last dividend announcement, especially if it's announced after the last dividend payment. For example -- Company X last paid a dividend of $0.33 per share for a history of quarterly dividend payments. The indicated dividend would be $1.32 per share should the dividend payment was expected to be paid at that rate for the next 4 quarters. If Company just announced after the last payment a $0.35 per share dividend to be paid at the next dividend payment date, the indicated dividend would often be listed at $1.40 per share.

Trailing Dividend suffers from similar issues as the Indicated Dividend. Some places just use the last payment times the frequency in the past. The issue is when you have a company that raises the dividend more than once a year. Realty Income (O) and W.P. Carey (WPC) come immediately to mind. In this case, the textbook definition given in your paper is correct however, you can't rely on the source how they calculated it unless they specify their method.

As a side note, dividend amounts and payment frequencies are always at the discretion of the Board of Directors and either can be changed at any time up until the time it is officially announced.

Qualified versus Non-Qualified dividends needs a little more explanation. These classifications only apply in practice for a taxable account. For tax-advantaged accounts such as a 401(k), traditional IRA, or 403(b), there is no distinction as to the Qualified status. They are not taxed when received. When withdrawing from a tax advantaged account, the entire amount is considered ordinary income and taxed at your applicable tax rate. For tax-free accounts such as a Roth 401(k),  Roth IRA, Roth 403(b) (don't even know if these are available), or a Health Savings Account (HSA), any withdrawals are tax-free depending on if you meet any restrictions such as the 5 year rule for Roths or medical expenses for HSAs.

Another caveat with Qualified Dividends, they are only eligible for stocks that meet the ownership time limits. To be eligible for qualified dividends to be tax-advantaged, you must you must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.

You also might want to look at what Ken & I discussed in this thread. 

Other than that, it's a pretty good list for someone looking at dividend growth stocks. Some things could probably be fleshed out further but we can discuss that as questions come up.

[jbuzz]

Your right about the notes from Mr Fish's notes. The document actually calls that out and gives credit. Do you think more is needed about that? - maybe add a reference link or something?

I updated a few clarifications and additions based on your feedback.

* Added Indicated Dividend as a cross-reference term.
* Added a full Forward Dividend Yield definition, including how it is calculated from the indicated annual dividend.
* Added a more info link for Forward Dividend Yield:
Forward Dividend Yield: Definition and Comparison with Trailing Yield
* Added a caveat to Trailing Dividend noting that data providers may calculate it differently, especially for companies that raise dividends more than once per year.
* Added a similar caveat to Forward Dividend Yield, since some providers annualize the latest regular payment while others may use a different convention.
* Expanded the Qualified Dividend explanation to note that the distinction mainly matters in taxable accounts.
* Added the common-stock holding-period rule for qualified dividends:
more than 60 days during the 121-day period beginning 60 days before the ex-dividend date.
* Expanded the Nonqualified Dividend explanation to note that in tax-advantaged accounts, the qualified/nonqualified distinction usually does not affect the tax treatment when the dividend is received inside the account.


As you say, many of these terms, numbers, etc are frequently used in various discussions - with an assumption that folks know what they mean (which I often don't).
The original purpose - for myself - was to provide high level descriptions, why certain metrics, values, calculations etc are important and, for values, how to interpret them - such as higher is better, or other generalities about how to perceive the metrics.
Perhaps some things even change meaning depending on the context? Not sure on that - but i wouldn't be surprised.

I'm trying to stay away from having this list become a retirement account tax guide, or any sort of exhaustive or comprehensive list. Its difficult to draw the line sometimes.

[Dividend Watcher]

No, I don't think you need to expound on the fact that some are from the CCC list Notes tab. Mr. Fish was pretty adamant that the information was freely available for non-commercial use and never complained when someone quoted something in that spreadsheet on Seeking Alpha. On second thought, you might want to mention where things like the Tweed Factor and Chowder Number came from and note that the original notes are hard to find. I don't know of any archives that are publicly available from those days.

I didn't examine any of your changes in any depth. It's your list and I agree, you needn't be too verbose. It is hard to draw the line sometimes. Make it suit your needs. If someone has questions, maybe that would prompt them to join here and post questions.

FYI (and maybe you already knew it), if you Preview your post, all the editing tools show up in the text window so you could get your bulleted list. Then you don't have to worry about spacing and line wraps, etc. Just a nitpick -- it makes my life easier even if I do repeat myself or make awkward statements all the time. (See my first reply for examples.    )

You said: 

Quote:with an assumption that folks know what they mean (which I often don't)

which begs the question ... why did you settle on dividend growth investing (DGI)? I certainly don't know everything! That was why Kerim originally created this site many years ago -- so we can share and learn together.

Anyway, hope you stick around share your knowledge and ask questions. Sometimes it gets boring sitting here posting to myself. 

[jbuzz]

The list specifically mentions that the Chowder, Graham, and Tweed info comes from the note page of the CCC list.  I have not yet done a deeper search for more info on those.. if anyone runs across any reference info for those, i'd be happy to add links.

Actually, I haven't googled yet, but I image there are probably all sort of screening rules.  Perhaps an interesting topic in itself to explore there - document, compare, and contrast different rules.  

I didn't mean to offend (if any was taken) with my comment about assumptions - it was not meant to be critical.  To have any sort of serious conversation on a technical topic there are of course assumptions being made about terminology - not just here, but anywhere.  In university IT classes ages ago, we called the process of agreeing on the meanings of terms 'coming to terms'.  I was just calling out that I struggle with that sometimes and was a motivation for my list.

One of the goals of that list was to provide fodder for discussion.  So far, both my attempts (database and terms list) have not generated much response.

I've already gotten a lot of value from this site - Finding out about the CCC list alone - and the studying of it - was a big learning for me - especially some of the things related to screening rules.

I wrote a bunch of code to extract (and keep up to date) what i 'think' is all the data from yahoo and alpaca data source APIs needed to reproduce that list.  Its just raw data in a database right now, still need to sort out the queries to process it into useful form... a report or spreadsheet or something...but I fell off the wagon when the weather turned nice.

I can only imagine that Mr Fish also had some sort of automation to help maintain that list.  Doing it manually would seem like a huge task!

Thanks for the tip about using preview.  I'm used to using markdown to format posts, just not having to preview to see changes - was wondering why it wasn't working.

Hope the boat restoration (pics?) is proceeding apace and your able to get it out this summer.  Maybe a boat thread in the appropriate category

lol, your the only one who has responded so far - I appreciated your feedback.

Cheers
- JB

[Dividend Watcher]

JB, Don't expect much for responses at this time. It's been dead in here for a while. I keep posting to keep this forum active hoping more people will show up. If not, it satisfies my itch to share things that may help someone. There are often times lurkers who take a look besides the bots. They just never bother to join and contribute so I don't know if they've found anything helpful or not.

I understand the "fell off the wagon when the weather turned nice" comment. I only get 4, 5 if lucky, months to sail and work on the boat every year. Didn't help this year as it's been a cold and rainy spring, I'm getting more chores around the house done this year, plus working on the boat. Then, two weeks ago, I fell off the seat in my cockpit while doing some work and severely sprained my ankle. I've only been back on my own two feet without the Storm Trooper boot for a few days now. So, I've been distracted from updating dividend announcements, working on analysis spreadsheets, and continuing to compile my CCC list. Hang on to those code snippets, they may come in handy someday. I may even ask for some help with that someday.

I'll think about adding a thread on the boat shortly. Not much useful documentation yet as I'm still tearing things apart and planning.

Hope you hang around for a bit as it's nice to have someone to interact with.