May 26, 2014

Simple guide to dividend collection from Thai-listed stocks

No, this is not another get-rich-financial-freedom-with-dividends type of post. This is a simple write-up about receiving dividends from Thai-listed companies when the shares are bought through a local (Singapore) broker.


Here are some facts about the SET;



1st quarter has passed and many companies distributed dividends and one of them was Krung Thai Bank that paid 0.88 baht/share.

Example calculation
No. of shares: 1000
Dividend/Share: 0.88 baht
Exchange rate: 0.03762

Tax/Broker handling fees;
Thailand: 10% withholding tax
Singapore: $10 + GST = $10.70

Gross dividend will be 880 baht / S$ 33.11
After 10% tax from Thai side: 792 baht / 29.80
After fees from SG: S$ 19.10

Comments

After the payable date given by the company, I received the dividend in the mailbox 10 days later. What happened was the dividend will be taxed first from Thailand, then the handling fees/GST from the Singapore broker will be deducted. A cheque was be mailed to me from my broker so I do not have any direct interaction with the Thai company at all.

At first glance, it seems to be very unattractive as the final net dividend received is barely 60% of the declared dividend, and a rough calculation of the dividend yield based on 1000 shares will be approximately 2.5 to 3% net, while the gross yield is about 4.8%.

However the handling fees are a fixed S$10.70 so it is negligible when you have accumulated a large position, however the handling fees are imposed per transaction. This will be annoying when you receive multiple dividends because they are charged separately.

I have previously mentioned here in the comments that I had been unhappy with my local brokerage and that a Thai domestic broker was more practical.

There are many reasons to and not to seek exposure to foreign stock markets, especially Thailand's. If you hold a very fearful and skeptical view, you should step back and ponder whether your fears are exaggerated, especially when most western media tend to have pretty sloppy or biased reporting regarding Thailand. On the other hand if you are extremely optimistic, it is also wise to re-examine your reasons for being so, and whether certain arrangements that you think are in place now will continue to be so in future.

2 comments:

  1. Hi, can a foreigner open a trading account with Thai local broker? Thanks.

    ReplyDelete
  2. Ryan, you will need a Thai bank account to begin with. You can try approaching some of the larger banks such as SCB, KBank, BBL if not the brokers themselves like KGI for example.

    I can't really offer advice as I only have 1 broker and can't compare between the rest. All I can say is that the commissions paid are really lower than SG.

    ReplyDelete

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