How dividends work on the Russian market

A dividend is the part of profit a company hands to its shareholders. The word is simple; the path from decision to money in the account is long, and every step has a place where an inattentive investor loses the payout.

Who makes the decision

The board of directors recommends the size of the payout. It becomes binding only once the general meeting of shareholders approves it. Weeks pass between recommendation and approval, and the meeting may approve less than recommended — or approve nothing.

The record date and the last day to buy

The right to the payout goes to whoever is on the register on the record date. But buying on the record date itself is already too late: settlement is not instant, and the security will reach your account after the day that matters. The last day to buy comes earlier — by exactly the length of the settlement cycle.

Upcoming record dates are visible in the calendar:

The dividend gap

On the first trading day after the record date the share usually opens lower — by roughly the size of the payout. That is neither a crash nor a reaction to bad news. Money left the company, and it became worth exactly that much less. Buying the day before the record date, taking the dividend and selling straight afterwards is not a profit but an exchange of one sum for the same sum less tax.

Where to look

The dividend yield on an instrument card is computed from payouts declared over the last twelve months:

Historical yield is the past. Only a company's dividend policy turns it into a forecast, and that is where a conversation about future payouts should begin.