Dividends Frequency: US vs International

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slamfire
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Joined: Thu Mar 30, 2017 7:35 am

Dividends Frequency: US vs International

Post by slamfire » Thu Jul 11, 2019 10:21 pm

Earlier today, I was wondering why a Total International Stock Market Index Fund typically has a high Q2/Q4 dividends and a low Q1/Q3 dividends. Whereas, a Total US Stock Market Index Fund has relatively consistent dividends.

After a little bit of research, I think that occurs because most international companies only pay dividends once or twice a year. So that leads me my next question.

Why do US companies typically pay dividends on a quarterly basis while international companies pay dividends on a semi-annual basis?

Is there any reason?

Valuethinker
Posts: 38161
Joined: Fri May 11, 2007 11:07 am

Re: Dividends Frequency: US vs International

Post by Valuethinker » Fri Jul 12, 2019 2:18 am

slamfire wrote:
Thu Jul 11, 2019 10:21 pm
Earlier today, I was wondering why a Total International Stock Market Index Fund typically has a high Q2/Q4 dividends and a low Q1/Q3 dividends. Whereas, a Total US Stock Market Index Fund has relatively consistent dividends.

After a little bit of research, I think that occurs because most international companies only pay dividends once or twice a year. So that leads me my next question.

Why do US companies typically pay dividends on a quarterly basis while international companies pay dividends on a semi-annual basis?

Is there any reason?
A reason is not always a good reason.

But international companies do indeed report only annually or semi annually.

I am not sure where US approach of quarterly earnings reporting began, but I believe it is a NYSE listing requirement.

I for one do not support it:

- these are unaudited numbers and accounting policies and timing issues mean the numbers can be manipulated and are in any case of lower quality than annual numbers

- it encourages management to excessive short termism in thinking and incentivizes "smoothing" of numbers (I once heard an ex (large industrial conglomerate) finance guy explain how he used swaps to smooth earnings for operating divisions). This is a particular issue for post IPO tech companies in my experience. Making "the Street" forecast determines whether investment, recruitment and capital spending plans go forward

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JoMoney
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Joined: Tue Jul 23, 2013 5:31 am

Re: Dividends Frequency: US vs International

Post by JoMoney » Fri Jul 12, 2019 8:22 am

Here's an old thread,
viewtopic.php?t=34509
that points to a research paper:
"The More, the Merrier: An International Analysis of the Frequency of Dividend Payment" (2010 Ferris, Noronha, Unlu)
That looks like it might have some information of use... At the moment, I can't quickly find a free access version of the paper...
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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