stock dividends invest guide
Investing & Retirement

How to Invest in Dividend Stocks

November 9, 2023 - Dan Urner

For many investors, stock dividends are an important element of investing. This guide answers key questions about how to invest in dividend stocks as a Swiss investor.

Alongside capital gains, stock dividends are a second source of returns on stock market investments. This guide provides the basic knowledge you need to begin using shareholder dividends in your investment strategy.

What are stock dividends?

A stock dividend is a portion of a company’s profit that is paid out to the company’s shareholders. Each shareholder receives a fixed dividend for each share that they own.

Next to voting rights, dividends are the most important privilege that comes with owning shares in a company. However, companies are not obligated to pay out dividends. With permission from shareholders, a company can use its profits for other purposes, such as investments. Some large companies like Amazon and Tesla, for example, do not pay out dividends to their shareholders.

How big are stock dividends?

Normally, a company’s executives decide how big the dividend should be, and make a recommendation at the company’s annual general meeting. In Switzerland, dividends are normally paid out once a year, but in the United States, dividends are often paid out on a quarterly basis.

The value of a stock, with regards to the dividends it yields, is indicated by the stock’s payout ratio. This figure shows how much of a company’s profit was paid out to its shareholders. For example, if a stock has a payout ratio of 25 percent, then one fourth of the company’s profits are paid out to shareholders. It is possible for a company to have a payout ratio above 100 percent. That can happen when a company pays out money from its financial reserves to its shareholders.

Another key figure, the dividend yield, shows how high a company’s dividends are in relation to its stock price. This figure is calculated by dividing the gross, per-share dividend by the current stock price, and then multiplying the result by 100.

Table 1: Stocks included in the Swiss Market Index (SMI), sorted by dividend yield

SMI stock Stock price Gross dividend in 2022 Payout ratio Dividend yield
Kühne + Nagel CHF 242.50 CHF 14 62.82% 5.77%
Swiss Re CHF 99.26 CHF 5.69 391.94% 5.73%
Zurich Insurance Group CHF 437.30 CHF 24 84.53% 5.49%
Swiss Life CHF 589.20 CHF 30 60.52% 5.09%
Swisscom CHF 513.80 CHF 22 71.16% 4.28%
Holcim CHF 58.94 CHF 2.50 42.97% 4.24%
Novartis CHF 83.34 CHF 3.20 104.31% 3.84%
Roche CHF 252.80 CHF 9.50 60.69% 3.76%
Partners Group CHF 1007.50 CHF 37 95.45% 3.67%
Nestlé CHF 99.75 CHF 2.95 84.46% 2.96%
ABB CHF 31.12 CHF 0.84 69.06% 2.70%
Geberit CHF 472.90 CHF 12.60 59.99% 2.66%
UBS CHF 21.98 CHF 0.50 22.01% 2.27%
Richemont CHF 112.45 CHF 2.50 653.99% 2.22%
Givaudan CHF 3057 CHF 67 72.08% 2.19%
Sonova CHF 225.90 CHF 4.60 42.33% 2.04%
Logitech CHF 71.46 CHF 1.06 52.11% 1.48%
Sika CHF 227.80 CHF 3.20 42.35% 1.40%
Lonza CHF 329.10 CHF 3.50 21.40% 1.06%
Alcon CHF 67.02 CHF 0.21 34.63% 0.31%

Stock prices are based on the closing prices on November 3, 2023, as per The source for payout ratios is

How are dividends from Swiss stocks taxed?

Dividends from Swiss stocks are generally subject to Swiss income taxes, and an anticipatory tax is deducted to ensure this. You have to declare your gross dividends along with your other taxable income in your tax returns. The 35 percent anticipatory tax is refunded after you correctly declare the stock in the securities declaration form of your Swiss tax return.


How are dividends from foreign stocks taxed?

Dividends from foreign stocks are typically subject to a withholding tax in the country where the company is domiciled. Whether or not you can reclaim foreign withholding taxes depends on whether or not Switzerland has a relevant double taxation agreement (DTA) with that country. You can find more information in the guide to taxes on investment profits.

How important are dividends when selecting stocks?

Dividends are, along with possible capital gains, part of the return that you earn from a stock investment. When a company pays out dividends to investors, it sends a positive signal. It normally means that the company is making a profit. Additionally, dividends provide a flow of income that can be reinvested. Dividends can have a motivational effect.

However, the amount of focus you should place on dividends depends primarily on your investment strategy. In a dividend-based strategy, the reliability and size of dividends are the most important criteria. But if your aim is to profit from capital gains in the value of stocks, then your focus should be the potential for growth in the industry sector, and for the company itself. You can learn more in the guide to investment strategies.

An extraordinarily high dividend can be a warning signal. A company may pay out very high dividends to its shareholders when the value of its stock is in decline, or if it expects a loss in value. By offering high dividends, the company hopes to attract or retain investors. These high dividend payments normally are not sustainable. For example, if the price of a stock with a 3 percent dividend yield were to fall by 80 percent, the dividend yield would shoot up to 15 percent, but the actual dividend per share would remain exactly the same.

What are dividend aristocrats?

The term dividend aristocrats refers to exchange-listed companies that have consistently increased the size of their dividends for 25 consecutive years. According to a report by Swiss bank Vontobel, there are 15 Swiss stocks that fall into the category of dividend aristocrats. There are also foreign companies, such as Coca Cola and IBM, that have this classification.

Table 2: Swiss dividend aristocrats

Company Industry sector Domicile ISIN
Also Information technology Emmen CH0024590272
DKSH Manufactured goods, services Zürich CH0126673539
Geberit Sanitation technology Rapperswil-Jona CH0030170408
Givaudan Chemicals Vernier CH0010645932
Interroll Machines, tools Sant’Antonino CH0006372897
Logitech Computer and networking hardware Lausanne CH0025751329
Nestlé Food processing Vevey CH0038863350
Novartis Pharmaceuticals Basel CH0012005267
Orior Food processing Zurich CH0111677362
Partners Group Finance, holding company Baar CH0024608827
Roche Pharmaceuticals Basel CH0012032048
Sika Chemicals Baar CH0418792922
Swiss Life Insurance Zurich CH0014852781
Temenos* Information technology Geneva CH0012453913
Zug Estates Real estate Zug CH0148052126

*Strictly speaking, this company does not yet fulfill the requirements to be classified as a dividend aristocrat, as it has only paid out dividends since 2012. Sources:, Vontobel. Date: October 27, 2023.

Dividends that remain stable or even get bigger over long periods of time indicate that the company’s business model is sound, as the company remained profitable even during periods of crisis. But it is important to keep in mind that companies are classified as dividend aristocrats based on past dividends. While the chances of a positive trend continuing are high, there is no sure way to know how things will develop in the future.

Are there any ETFs that specialize in stock dividends?

If you want to focus your investment strategy on stock dividends, then exchange-traded funds (ETFs) that specialize in dividends are one way to do it. The cost of using ETFs is low compared to the cost of using actively-managed mutual funds.

Table 3: Examples of stock dividend ETFs, ranked based on their total expense ratios (TERs)

Exchange-traded fund (ETF) ISIN Currency Domicile TER Dividends
iShares Swiss Dividend ETF CH0237935637 CHF Switzerland 0.15% Distributed
WisdomTree Eurozone Quality Dividend
IE00BZ56TQ67 EUR Ireland 0.29% Accrued
Franklin Global Quality Dividend UCITS
IE00BF2B0M76 USD Ireland 0.30% Distributed
UBS ETF (IE) S&P Dividend Aristocrats
IE00BMP3HG27 USD Ireland 0.30% Distributed
SPDR S&P Euro Dividend Aristocrats
IE00B5M1WJ87 EUR Ireland 0.30% Distributed
SPDR S&P US Dividend Aristocrats
IE00B6YX5D40 USD Ireland 0.35% Distributed
VanEck Morningstar Developed Markets
Dividend Leaders UCITS ETF
NL0011683594 EUR Netherlands 0.38% Distributed
Fidelity Global Quality Income UCITS
IE00BYXVGZ48 USD Ireland 0.40% Distributed
Fidelity Global Quality Income UCITS
ETF (CHF Hedged)
IE00BMG8GR03 CHF Ireland 0.45% Distributed
Lyxor SG Global Quality Income NTR
LU0832436512 EUR Luxembourg 0.45% Distributed
Global X SuperDividend UCITS ETF
USD Distributing
IE00077FRP95 USD Ireland 0.45% Distributed
iShares STOXX Global Select Dividend
DE000A0F5UH1 EUR Germany 0.46% Distributed
SPDR S&P Pan Asia Dividend
Aristocrats UCITS ETF
IE00B9KNR336 USD Ireland 0.55% Distributed


The ETFs listed in Table 3 all use full physical replication. That ensures that the fund actually holds the stocks, rather than using swaps. Physically replicating ETFs are considered safer than ETFs that replicate stock performance synthetically. From a tax perspective, it is advantageous to use an ETF that is domiciled either in Switzerland, Ireland, or Luxembourg.

Distributing or accruing?

Some ETFs do not distribute, or pay out, the dividends from the stocks they hold to you. Instead, the dividends are accrued, meaning the fund keeps and reinvests them. Other ETFs distribute the dividends. Distributed dividends are paid out to your stock brokerage account.

Accruing funds are suitable if you expect the stocks that the fund invests in to grow in value. But if you want to invest with the goal of earning an income from your investments, then you should use distributing funds.  

More on this topic:
Compare Swiss stock brokers now
How investment profits are taxed in Switzerland
How to invest money in Switzerland
Dividends in kind from Swiss stocks

Editor Dan Urner
Dan Urner is editor at
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