How to view "Dividend Stocks" and tips for choosing dividend stocks at the right timing

Why Invest in Dividend Stocks?

Investing in dividend stocks is a good option when the market is relatively stable and there’s no expectation for stock prices to soar. Besides receiving cash flows from holding shares ( similar to interest from a savings account ), there’s also the opportunity for capital appreciation from future stock price growth. Most importantly, you become part of the business you invest in.

What Exactly Are Dividend Stocks?

Dividend stocks are shares of companies that have a policy of regularly paying profits to shareholders. The amount paid depends on the company’s earnings and approval from the shareholders’ meeting.

Real Example: If ABC shares declare XD (Exclude Dividend) at 1.75 baht/share and you hold 10,000 shares before the XD date, you will receive a dividend of 17,500 baht (before 10% tax).

It’s important to understand that dividends come from profits, not capital. Each year, companies allocate profits for reinvestment, and the remaining profit is returned to shareholders. This could be annual profit, special profit, or accumulated profit from previous years.

How Many Types of Dividend Payments Are There?

Divided by Payment Method

1) Cash Dividend - The most common method, straightforward, credited directly to your account (with 10% tax).

2) Stock Dividend - Receive new common shares instead, which helps the company retain cash but may dilute the stock price (dilute) because the number of shares in the market increases.

Divided by Payment Timing

Annual Dividend - Paid once a year after the fiscal year-end (around March), approved at the shareholders’ meeting, with actual payment about a month later.

Interim Dividend - Additional payment outside the regular annual cycle (e.g., Aug.-Sep., for companies paying twice a year).

The 3 Numbers Investors Must Watch to Evaluate Dividend Stocks

1) Dividend Policy (Dividend Policy)

Each company has its own payout framework, such as:

• INTUCH pays 100% of dividends from subsidiaries’ profits
• PTT pays at least 25% of net profit

If INTUCH’s EPS (EPS) is 3.3 baht, it’s expected to pay around 3.3 baht. PTT’s EPS is 2.64 baht, so it will pay no less than 0.66 baht.

2) Dividend Payout Ratio (Dividend Payout Ratio)

Formula: (Dividend per share ÷ Net profit per share) × 100

This tells you what percentage of profits the company distributes to shareholders. For example, in 2022, INTUCH paid 4.72 baht, with an EPS of only 3.28 baht = 144% (using retained earnings).

3) Dividend Yield (Dividend Yield)

Formula: (Dividend per share ÷ Current price) × 100

This is the most important! It shows the actual return you will get based on your cost.

Examples:

• INTUCH pays 4.72 baht at a price of 72.75 baht = Yield 6.5%
• If you buy at 50 baht = Yield 9.44%
• If you buy at 80 baht = Yield 5.9%

This is why timing your purchase is crucial!

5 Tips for Choosing Dividend Stocks Without Falling into Traps

1) Find sustainable profit-making companies

Dividends must come from profits. No profit, no dividends. Therefore, choose companies that are fundamentally strong (look at ROE, debt-to-equity, growing industry).

2) Don’t overexpect “incredible” dividend payout ratios

High, consistent dividend payout ratios that seem miraculous don’t really exist. If you encounter such cases, dig deeper:

• Is it paid only once?
• Is it using accumulated profits (which will run out in a few years)?

Often, investors receive high dividends only 2-3 times and then must endure holding a loss for a long time.

3) Check the payout history for the past 5 years

Companies that pay regular dividends at reasonable rates indicate financial stability, better than irregular, unpredictable payouts.

4) Consider purchase costs

Example: Same dividend of 1 baht per share

• A bought at 5 baht → Yield 20%
• B bought at 6 baht → Yield 16.6%

Lower cost = higher return. Timing your entry is very important.

5) Inflation rate will “eat into” your profits

Dividends should be compared against inflation. If inflation averages 2% per year but dividends are only 1.5%, you are indirectly losing money. The sweet spot is looking for dividends from 3-5% and above.

Step-by-Step Guide to Buying Dividend Stocks from Zero to Receiving Money

Step 1: Open a stock trading account with a broker

Required documents: copy of ID card, bank account page, broker’s application form. You may need to provide 3 months of salary slips to request a credit limit.

Tip: Register for E-Dividend Service simultaneously to have dividends automatically transferred to your bank account (save time).

Approval time: 1-5 business days.

Step 2: Transfer funds into your account

After approval, deposit funds for trading and wait for the right moment.

Step 3: Search and monitor

Use tools such as:

• Watch List to track prices
• Technical charts (TA) to find good entry points
• Valuation to analyze fair price (Fair Value).

Step 4: Follow operational results

Read annual profit/loss → forecast dividends → wait for XD announcement → check shareholders’ meeting.

Important: You must hold until the XD date to receive dividends. Selling before XD = no dividend.

Step 5: Receive dividends

Money will be credited to your E-Dividend registered bank account within 1 month (after 10% tax deduction). You can then deduct this from your annual taxes.