swiss stocks how to profit from dividends

Swiss Stocks: How to Profit From Dividends

A basic guide to Swiss stock dividends.

Every year, dividend hunters stalk the scene in search of stocks with high profit potential.

With the ongoing low-interest environment making deposits and bonds increasingly unprofitable, dividend hunters have turned to the “stock yields instead of interest yields” dogma in search of worthwhile investments.

Historically, a number of Swiss stock certificates listed on the SMI and SPI have turned out to be veritable cash cows. These have included stocks issued by Mobilezone, Swisscom, Kardex, Banque Cantonale Vaudoise and Zurich. However, company stock values can experience substantial fluctuations year on year, and every year brings a new set of top performers.

In 2015, the 20 largest Swiss companies distributed a record-breaking sum of approximately 36 billion francs in dividends, according to an estimate by the Handelszeitung.

In 2015, Nestle paid out a dividend of CHF 2.25 per share. The same year, Swiss Re investors received a special dividend of 3 Swiss francs per share on top of the CHF 4.25 regular dividend. In 2016, Swiss Re’s regular dividend was CHF 4.60.

In the best case, investors can reap double profits. On the one hand, they stand to gain from luxurious profit distributions. High-yield stocks can deliver profits as high as 5 percent.

Dividends are paid out to traders who are in possession of stocks on the ex dividend date. This usually falls on a date several days after the issuing company’s annual general meeting (AGM). The bitter pill: dividends are taxable.

On the other hand, the value of high-dividend stocks often shoots up just ahead of the issuing company’s AGM. At that time, many investors use the opportunity to rake in profits, riding on the rising stock prices.

In some cases, short-term stock price hikes of up to 15 percent result. However, rates generally settle again after profit distributions have been made.

As a general rule, buying stocks solely for the purpose of reaping stock dividends is hardly recommendable. Fluctuations in stock prices can easily outperform or wipe out profits reaped on dividends.

Last but not least, if you prefer to enjoy the bulk of your stock market profits yourself, you may want to consider using an affordable online broker to cut down on brokerage fees.

The team

More on this topic:
Dates of major Swiss company AGMs
Swiss online broker comparison
What is a dividend?
How are stock market earnings taxed?

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The magazine provides accurate, unbiased information on topics related to finance and money. In addition to research and expert interviews, the magazine contains numerous financial guides.