S
scouseben
Member
I have a question regarding the calculation of the GDY which is one of the "ratios" used to analyse accounts.
I believe that dividends are paid net with a 10% tax credit and there is no further liability for basic rate tax payer. Does this mean that 20% tax is deducted from the gross dividend but the governemnt in effect "refund" 10% tax (ie the credit), terefore the Net Dividend Yield received by the share holder is 90% x GDY?
Secondly, in questions were it states that, say £100000 dividend is paid, is this stating what is paid out by the company, or what is paid to (recieved by) the share holder, and is there a difference?
Eg. So if 100000 shares, dividend per share (DPS) of £1 (or "grossed up" £1.11, share price of £20 then would GDY = DPS / share price = 1 / 20 = 5% or = 1.11 / 20 = 5.5% ?
It might be a bit of a stupid question but I think I am confusing myself somewhere along the line. It makes sense to me that the the share holders receive it net of tax ie NDY, but then why would they be concerned with GDY?
I believe that dividends are paid net with a 10% tax credit and there is no further liability for basic rate tax payer. Does this mean that 20% tax is deducted from the gross dividend but the governemnt in effect "refund" 10% tax (ie the credit), terefore the Net Dividend Yield received by the share holder is 90% x GDY?
Secondly, in questions were it states that, say £100000 dividend is paid, is this stating what is paid out by the company, or what is paid to (recieved by) the share holder, and is there a difference?
Eg. So if 100000 shares, dividend per share (DPS) of £1 (or "grossed up" £1.11, share price of £20 then would GDY = DPS / share price = 1 / 20 = 5% or = 1.11 / 20 = 5.5% ?
It might be a bit of a stupid question but I think I am confusing myself somewhere along the line. It makes sense to me that the the share holders receive it net of tax ie NDY, but then why would they be concerned with GDY?