"Very simple, as in your example, we already have RM10k invested at RM1 having paid RM0.1 Dividend. Before the next Dividend announcement, the price dropped to RM0.5 due to Bonus issue 1:1. "

You have changed the parameters of my example... I already stated dividends issued first, then on 01 Jan 2024 executed a bonus issue. You changed it to bonus issue first, then dividends. And even if u did that, the DY will still be 10%, because the new Dividends per share will be RM0.05 divided by the new price of RM0.50. Not so simple indeed.

Dividend issued on 31st Dec 2023. Bonus issue on 01 Jan 2024. Dividend issued before bonus issues, so how come u use the price dropped (RM0.50) for calculation of 01 Jan 2023-31 Dec 2023 calculation of dividend yield for 2023??

Before we go further down the never-ending rabbit hole, can you clear this up for me first?

1. "You are absolutely correct in an ideal calculation. Only problem is the RM0.05 DPS declared 12 months later; and the current calculation on corporate activity using past DPS figures. In your example given, the DY calculated after Bonus Ex will be RM0.1 divided by Rm0.5 equal to 20% (assume post Dividend payout recovered back to RM0.5)."

How did you get to the 20% DY??

2. "As mentioned earlier, you are absolutely correct for calculation after 31 Dec 2024. What data to use in between for DY (TTM) calculation?"

When you say 'data to use in between for DY(TTM) calculation, can u specify the timeframe...did you mean like from 01 jan 2025 to 31 dec 2025? or something else?

Thanks.

Yes bonus shares issued 01 Jan 2024, share price drop to RM0.5 after issue, Total dividends paid out for 01 Jan - 31 Dec 2024 is RM1000 (12 months profit of RM1000 distributed to 20000 shares), all clearly stated in my example, DPS for 2024 is 0.05, NOT 0.1. Therefore DY is still 10%. You need for the formula for calculating DPS also??

To better understand these mechanisms, such as bonus issue, dividends and DRP...it's better not to automatically assume that anything that dilutes our shares is bad. They are just trying to find different ways to reward their investors in a way that's also good for the company. As Thirai Thiraviam said, some investors prefer to 'cash out' their profits, some prefer to leave it with the company for a chance of better growth (these will be those that invest in Tesla and Amazon). Some prefer a bit of both...think of RHB's DRP as providing you with more options on your options. They do a dividend payout of 60% (comparable to other banks) yet give you an option to give them a bit more 3-5% to reinvest if you opt for the shares (at a reduced price). Just more choices.

Ahhh...now I understand where the confusion comes from....

"Dividend Yield (DY) calculation depends on Dividend per share (DPS). If NOSH increased with the same quantum amount $ paid out as Dividend, the DPS will reduce in future"

Let's assume in 2023, company A has 10000 shares valued at RM1 (market capitalisation is RM10,000), makes RM1000 a year and gives out 100% in 31st Dec (all RM1000 given out) of it's profits in dividends. Dividend yield is DPS (RM0.10) divided by current market price of RM1 per share (google it, and I think this is where your mistake is) giving a dividend yield of 10%. At the same time it conducts a bonus issue of 1:1 (1 share will get 1 bonus share).

On 01 Jan 2024 it's NOSH doubles to 20000, share price falls accordingly to RM0.50 per share. Assuming all the 'quantum' remains the same, it makes the same RM1000 profit, distributes all RM1000....so DPS drops to RM0.05 per share (as you correctly mentioned DPS drops).... but dividend yield which is RM0.05 divided by current market share of RM0.50 means you get the same dividend yield of 10%!!!!!!!!!

"If NOSH increased with the same quantum amount $ paid out as Dividend, the DPS will reduce in future Dividend payout. Therefore the highlighted previous statement ‘assuming the number of shares is constant’, implied NOSH is important in DY calculation." As we can see, not true. DPS is DPS, DY is DY. They are two completely different things and their relationship is not necessarily directly proportional to one another.

"During Bonus issue or Share Consolidation, the declared DPS for the last 12 months used in calculation did not take this increase or decrease NOSH into consideration. The share price will decrease for the Bonus issue, and will increase the DY value during ex. The opposite for Share Consolidation. This DY calculation will cause misleading info for comparison of counters DY vs Bank FD rates. "

As we can see, it will not. Misleading info is only caused by misunderstanding of the ratios, and the calculation of the rations.

@BLee,

Not sure I follow what you mean...but I kinda feel that your argument centres around changes to NOSH, so before we go further can you expand a bit on how NOSH affects the dividend yield calculation?

'Yes, it is just a different instrument; but NOSH is used in DY calculation. As mentioned earlier, it is just a barometer to compare companies given out Dividend; it is irrelevant for companies that don't. I have purposely changed the question to DY as I personally feel DY is good to compare with FD rate; but unlike to compare Dividend per Share of each stocks as it will be a different yardstick.'

Your question was 'For example, if a company gives out a 1 for 1 bonus issue, the share price will be adjusted by half, how will the DY ratio be at that particular moment??'

The company didn't give out a dividend that year, so how can you calculate the DY? It doesn't matter if the company has never given out dividends forever or 1 year or 2 years, if in that year it only gave out bonus issues, there is no dividend 'ratio' to be calculated. You have answered your own question, it's irrelevant.

"In the formula, NOSH changes can affect the DY value quite substantially vs earlier declared Dividend; therefore just to caution also to view any Bonus, Rights, PP and even ESOS issues to take DY as a comparison…just my thoughts."

I'm not sure I follow you and I'm leaning towards not agreeing with what you've said. Maybe you give an example to prove your assertion?

Very very very very very true. Another example is Taliworks. Every year for the past don't know how many years always give out 0.0165 dividends....DY around 7%...so attractive that it's listed as one of the top dividend stock in Malaysia. But it was paying out in dividends more than it's annual earnings, this meant that dividends were eating into it's cash reserves. That's why finally it cannot tahan and share price start to drop, then now dividends drop to 0.01 every quarter. So dividends is just cash payout....you have to look at other metrics, I agree 100% with invest8912.

Don't get me started on share dilution 😂😂😂

@BLee : just my humble opinion but I think you are also confusing bonus issues with DY. Share options, Bonus issues, Dividends...all these are just different instruments which companies use to reward their shareholders and they all mean different things. Dividends are cash payouts (in cases with DRP it will state dividends with options for DRP, this just means u will get dividends with an 'option' to turn a small percentage of it into reinvested shares).

Bonus issues are where additional shares are given instead of cash. google will tell u the circumstances where companies prefer to use this to reward shareholders instead of cash dividends.

Both of the above + share options will affect the share price to reflect the changes after the exercise.

'For example, if a company gives out a 1 for 1 bonus issue, the share price will be adjusted by half, how will the DY ratio be at that particular moment??'

There will be no dividend ratio because the company did not issue any dividends. Try this simple method to verify my assertion. Google Tesla or Amazon dividend yield, it will say 0. Why? Because these companies have NEVER issued dividends before. They use other ways to reward their investors...share options, bonus issues..ESOS. But all of u will agree that these are TOP 500 companies in the world...so I think u will agree with me they are well run. So are they positive dividends company? No, they are 0 dividends company. Because dividends are not negative or positive, they are just a metric to tell us whether the company has a habit of rewarding it's investors thru cash payouts. Simple as that.

@ jeffrey1166 - 'keep buying je rhb' ...ya did that...can't say I don't regret doing that. I'm not a good investor...I switched from Maybank (avg price bought 7.15, sold 8) and dumped all into RHB....kicking myself sometimes..cos now it's RM9.90~ reminds me of a coffee talk I had with my friends...a lot of them say...'if price increase more than 10% I will take and runnn.... then one guy say ...'run where? where you going to run to when that money is sitting there in your account u have to think...run where? usually the new stock u run to can turn out worse'...true lor..unless u are like KWSP or some big funds investor..if you just the normal investor better just keep topping up slow and steady.

Seriously though...is there such a thing as 'negative dividends'????? I've noticed that 95% of Malaysians and Singaporeans are incapable of admitting they ever get anything wrong in online debates. They just double down, refusing to answer direct questions and moving on to the next point. If, and when, finally cornered, it descends into name calling. What's it in our psyche that makes it impossible to say 'hmmm ok I might have got that point wrong, but I was kinda concerned that it might lead to share dilution, care to share your opinion on that?' ....

Can you explain why you think 1,2 and 3 are classified as 'negative dividends'?

Share dilution happens with DRP but it doesn't affect the Dividend Yield, it's two totally different things. And share dilution is not necessarily a bad thing. It can be good or bad. If all of us opt for DRP, yes the shares will be diluted, but if the money that we reinvested thru DRP is put to good use by RHB (if RHB manages to get more than 5-6% returns from it), then it's a good thing. Similarly, if you opted not to take the DRP and reinvested the money in other things and got a 10% returns, then you are a genius and made the right call. Regardless of whether our shares has been diluted or not, the dividend yield is 7+%. That's why every literature you can find on the internet about RHB's Dividend Yield will state that the DY of RHB is 7+%. I agree with prudentinvestor and many of the others here on that point.

When's the latest quarterly results coming out? MBB results out and price fly to RM10. Hoping for same trend with RHB.

Sold for 4.94 a few weeks ago...then next day it close at 5.05 i think. was kicking myself but not so much now 😅. But i did sell it before the ex-date so basically 4.85.