Hi all, quick question about dividends on shares.
I understand how franking credits work, but from time to time I see mention of terms like gross dividend or after tax etc such as in this article:
I understand since the TLS dividend is 100% franked, you have a tax credit on each dollar of dividend of 30c. Just don't quite understand how that turns an 8% yield (ie. .28c/$3.37) into a 12% gross yield? Even if you assume an individual rate of 0 and he gets a full refund on the tax paid by the company, doesn't it look something like this; $1,000 investment (@ $3.37 share price) = 296 shares x .28c dividend = $82.88 + $24.86 tax return = $107.74 on $1,000 investment = 10.7% gross return.
Obviously I'm not following somewhere along the track.
I understand how franking credits work, but from time to time I see mention of terms like gross dividend or after tax etc such as in this article:
The most obvious option is for the Telstra board to declare a higher dividend. Telstra's dividend yield is currently about 8 per cent or 12 per cent after being grossed up for tax paid.
I understand since the TLS dividend is 100% franked, you have a tax credit on each dollar of dividend of 30c. Just don't quite understand how that turns an 8% yield (ie. .28c/$3.37) into a 12% gross yield? Even if you assume an individual rate of 0 and he gets a full refund on the tax paid by the company, doesn't it look something like this; $1,000 investment (@ $3.37 share price) = 296 shares x .28c dividend = $82.88 + $24.86 tax return = $107.74 on $1,000 investment = 10.7% gross return.
Obviously I'm not following somewhere along the track.