6 Key Questions to Ask About Australian Dividend Stocks
Being inquisitive and cynical about Australian dividend stocks has its positives and negatives.
There is a fine line between asking questions and sitting back while others reap the financial rewards.
This is a great time to put forward 6 key questions that investors can ask about Australian dividend stocks before taking advantage of their hard work.
1) What is the Dividend Yield?
The first question that most participants will have from the outset with Australian dividend stocks will be the yield. The objective in this environment is to source businesses and organisations that deliver high yields. It is often provided to shareholders on an annual basis as it represents a percentage of the overall stock price. If an enterprise pays their shareholders $2 in annual dividends with the cost of the share sitting at $20, then the yield is calculated at a rate of 10%.
2) What is the Payout Ratio?
Australian dividend stocks should also be analysed in relation to the dividend payout ratio, a figure that helps to establish what percentage of the company’s earnings that is being passed on to individuals and groups. For example, if the net income per share is listed at $1.50 and then proceeds to pay $0.75-per-share-dividend, then the payout ratio will be set at 50%. Thankfully there is transparency across the board in this context, allowing participants to see how well the end result will be if there is an investment in their brand.
3) What are the Earnings-Per-Share?
Jumping in on these dividend options requires members to think about the earnings-per-share figure (EPS). This is a way of simplifying the per-share value of a company’s overall earnings to see how much weight they carry in isolation. If there are reports that demonstrate a steady increase over time in the EPS, that will be indicative of an organisation that is heading in the right direction and one that will reward shareholders as they build on their own success.
4) What is the Company’s History & Progression?
A great way to examine the top Australian dividend stocks is to be removed from the exchange format and trading altogether. In this regard, it is helpful to step back and assess the company’s history and their upcoming progression. If they have developed new technologies, opened pathways into new markets and have been savvy with the commercial partners they have formed relationships with, then the financial returns are sure to follow. This can take time, but it is helpful to provide context to the project.
5) Does the Investor Have Knowledge About the Industry in Question?
It is always helpful if there is a degree of knowledge being applied to those shareholders who are getting involved with Australian dividend stocks. There will be members who like to consult with brokers and agents in this space as they guide them on best practice, yet a background in technologies, logistics, retail, sports, entertainment, agriculture, finance or other fields will be helpful to shape decision-making and track what brands have untapped potential in the market.
6) Are There Tax Implications With These Stocks?
Australian dividend stocks can very well be subjected to taxation, something that will shape the decisions that shareholders make about their next moves. These stocks will end up paying what is known as qualified dividends, a facet that is influenced by the client’s official tax bracket. If there are records to be provided to agents and brokers in relation to tax returns and tax brackets, then there will be clarity about how percentages can be allocated without worrying about the repercussions for the end of the financial year.