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Increase income by 'recycling capital'
Multiple dividends in a year - ASX - Australian Securities Exchange
"Find out how to use instalments to harvest dividends and use franking credits to enhance yield."
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Ever noticed a share price run up as an entitlement to a dividend approaches?
Investors buying in anticipation of a strong dividend can see the share price can run up and once announced, it can go even further as others buy in. Buying shares to gain dividends and franking credits can be profitable. However, it may require trading capital to be 'invested' for some months. Choosing an instalment over the same share can provide benefits over buying the share itself.
Instalments function like Telstra Instalment Receipts (IRs) with two payments - one up front and another due on a pre-determined future date (expiry). As with Telstra IRs, the holder is entitled to all dividends and franking credits after the first payment which enhances yield. Unlike Telstra IRs, the second instalment payment is a non-recourse loan upon which the holder has paid interest and a protection cost. Because of the non-recourse nature of the second payment, instalments can be used within self managed super funds (SMSFs), even though there is an element of gearing as there is no call on the borrower to repay the loan and no margin calls. Instalments are traded on ASX and can be bought and sold the same way as shares.
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Sim'
This is a general comment only and does not constitute advice. Before making financial decisions you should seek advice from a professional adviser, who can take into account your specific circumstances and investment goals.
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