RE: Aviva shareholders in line for big payouts27 Mar 2021 18:26
Special dividend payouts are actually not very welcome. Looking at Tesco, they did a sort of share consolidation - to reduce the number of shares and the proportion of the company and paid out a big chunk of money to shareholders. So you own fewer shares but the same proportion of the company. The dividend is taxed at whatever rate according to income. so in my case, I have £80k worth of shares. Say they hand out 12.5% the value of the company in a special dividend, I'll get 7 for every 8 shares I own - so my shareholding is worth £70k and I get a £10k dividend. If I am a higher rate tax payer, I'll pay 33% on the dividend, so my £10k is worth £7k. Wouldn't they be far better just buying another company and improving shareholder value. I'm not a fan or special dividends or share buy backs. They never seem to work!