Question by sd2010: how do calculate mutual fund dividends? I have an account on Scottrade and i had invested $ 300 bucks into RidgeWorth Funds High Income STHTX and only made a dividend of $ 1.44? and i don't get why i only made that little of an income when i had invested $ 300 bucks into the mutual fund. Also, if you could let me know if their are mutual funds that give good returns monthly. Please help! =/ Best answer for how do calculate mutual fund dividends?:
Answer by b2fnow
Hmm, you don't say whether these are corporate bonds or treasuries or whether they are short-term or long-term or give us any idea what the yield should be. Nor do you tell us over what time period you made $ 1.44; a month, a year? Barron's shows bond yields ranging from 1.5% to 4%. Yours is a "High Income" fund, so let's use 4%. Normally bonds are purchased at a discount to par value, so you add that difference to the coupon rate (yield rate) to come up with your dividend income. But let's compute what you would earn on just the coupon or yield rate of 4%. If you invested $ 300 at 4%, that would be an annual income of $ 12 .04 x 300 = 12 Monthly income would be $ 12 divided by 12 months, equals $ 1/month. Add in any profits from the rise in price of the bond, and that's where you get your $ 1.44. You are a Scottrade client, why don't you call them and ask them?
Answer by Paul
According to this info from Morningstar; http://quote.morningstar.com/fund/f.aspx?t=sthtx STHTX paid a distribution of $ .0435 (four point three five cents) on May 28. Dividing $ 1.44 by .0435 gives you 33.1 shares. They have averaged about four and a half cents per share per month in distributions. If you multiply 4.5 X 12 you get $ .52 per year. Divide .52 by the share price of $ 6.53 and you get roughly the stated yield of 8.31% - the math comes out to 7.99%, but it is likely the yield quote at the top of the linked page has not updated. In short, you got exactly what you should have gotten and you are going to get roughly that every month. As far as mutual funds that "give good returns" I suggest you use Morningstars fund screening tool; http://screen.morningstar.com/FundSelector.html Yahoo Finance has one also; http://screen.yahoo.com/funds.html As far as what b2fnow said above; "Hmm, you don't say whether these are corporate bonds or treasuries or whether they are short-term or long-term or give us any idea what the yield should be. Nor do you tell us over what time period you made $ 1.44; a month, a year?" He did tell you all you needed to know by giving you the ticker of the fund. The time period he made the $ 1.44 was for one month. If he had $ 300 into a fund whose NAV is $ 6.50, he has around 45 shares. However, dividing his stated distribution by the distribution per share, simple math tells me he owns 33.1 shares, as I mentioned above. "Barron's shows bond yields ranging from 1.5% to 4%. Yours is a "High Income" fund, so let's use 4%." No, lets not use 4%, lets use the info provided by Morningstar. This is a high yield fund with an average credit quality of BB. It is safe to assume the average coupon of the bonds held is closer to 8% than it is 4%. Just have a look at the top 25 holdings and you'll see what I'm talking about. "Normally bonds are purchased at a discount to par value, so you add that difference to the coupon rate (yield rate) to come up with your dividend income." Nonsense. The ONLY bonds normally purchased at a discount to their par are zero coupon bonds. All other bonds can trade at a discount to par or at a premium to par, depending on various factors. The above statement is completely inaccurate. Bond funds do not pay dividends, they pay distributions of interest payments and occasionally capital gains. The distribution paid on a bond fund is not calculated the way you suggest. It is based on the total amount of interest payments received by the fund from all of the bonds in their portfolio on a monthly basis, divided by the number of shares outstanding. Since a bond funds monthly income will vary depending on the payment schedule of the bonds held, the amount is different month to month and as a consequence, the yield changes every month. Coupon rate and "yield rate" ARE NOT THE SAME. The coupon rate of a given bond, with very few exceptions, DOES NOT CHANGE. Yield is a mathematical function of interest payments divided by price and that can and does change all the time based on the current market value of a bond. " But let's compute what you would earn on just the coupon or yield rate of 4%. "If you invested $ 300 at 4%, that would be an annual income of $ 12 .04 x 300 = 12" That is completely irrelevant to the way bond fund yields are figured and has nothing to do with the fund held by the asker. "Monthly income would be $ 12 divided by 12 months, equals $ 1/month. Add in any profits from the rise in price of the bond, and that's where you get your $ 1.44." More nonsense. Your answer is a disservice to the questioner. You may be a "Top Contributor" but you don't know what you are talking about in this regard.
Answer by Shashwat
it depends from company to company & a share trader can give you a better idea like Mansukh, Sharekhan etc..
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It's pretty easy to see intuitively why actively managed mutual funds aren't necessary for dividend growth investing -- but let's go a step further and do actual calculations. Calculations. The Vanguard Dividend Growth Fund (VDIGX) is pretty cheap, as ... Hidden Cost Of Mutual Funds: Why Dividend Growth Investors Should Go It Alone
Investors love dividend-paying stocks because of the reliability of their cash flows & stable businesses that will exist well in to the future. Utility companies, industrial conglomerates & oil & gas companies fall in to this category. However the run up in technology stocks in the late 1990s brought negative effects on dividend paying stocks because investors turned away from them in search of higher growth technology companies. In fact during the market top in March 2000, the average dividend yield of all companies in the S&P 500 Index fell to just 1.1%. This was versus a historic average dividend yield of 3%. Since then, tech stocks have tumbled & dividend paying stocks have become favorable again. In this article, we will go over why now is a good time to invest in dividend paying mutual funds.
Dividend Paying Mutual Funds
Obviously, investing in dividend paying stocks helps to grow your portfolio by re-investing the dividends & letting the power of compounding growth work in your favor.
Advantages of Dividends
Dividends are a way of rewarding shareholders who hold on to a company's stock. The best measure of a company's performance is cash flows & the company that can make stable dividend payments over many years & be able to pay all operating & capital expenses is the best investment you can make. Here are some more advantages of dividend paying mutual funds:
* Dividends add up over time - In fact over the last 25 years, the S&P 500 Index has gained 914%. If you add re-invested dividends, it soars to 2000%
* Dividends are tax-efficient - Interest gained from a Guaranteed Investment Certificate (GIC) at your local bank is taxed at your income tax bracket, which can be as high as 35%. Qualified dividends however are taxed at lower long term capital gains rates, which is 15% for most investors.
* Dividends grow overtime unlike GICs - Most companies that pay dividends are committed to growing their payouts over time as business improves, cash flow efficiency increases & to retain shareholder interest in their stock. As an example, consider McDonalds Corporation (NYSE: MCD). In the last 10 years, McDonald's shares have risen by 192.50% and the company has increased its annual dividend from 22.5 cents a share to a whopping $ 2.32 per share. This represents a tenfold increase in dividend along with the 193% capital growth. Whereas if you purchase US treasuries, you might get 3.2% interest for a 10 year bond with no growth in the interest rate i.e. the 3.2% interest will never increase because it is fixed. Recommend Why to Invest in Dividend Paying Mutual Funds Issues
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