Dividends on foreign funds, estimating current year

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rick51
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Dividends on foreign funds, estimating current year

Post by rick51 »

What’s the most accurate approach to estimate the dividends that an international/foreign fund may distribute in the current year?
alex_686
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Re: Dividends on foreign funds, estimating current year

Post by alex_686 »

Are you talking about specific stock, country, or index?

It is much harder to forecast international dividends because different countries have different rules. Some requires a certain percentage to be paid out. Others forbid paying out anything if earnings are negative. etc.

Also, beyond taxes why do you want to know? If you are trying to predict performance I can tell you from experience that it is a red herring. Focus on Total Returns. It is easier to estimate and more accurate. Dividends is just one sub-component of total returns and the error bars are going to be huge.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Misenplace
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Re: Dividends on foreign funds, estimating current year

Post by Misenplace »

This thread is now in the Personal Investments forum.

Moderator Misenplace :wink:
Karamatsu
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Re: Dividends on foreign funds, estimating current year

Post by Karamatsu »

If the market is efficient, investors' best estimate for changes in distribution yield will be priced in, making the best estimator of the forward distribution yield the current distribution yield. There unknowns, but they can be positive or negative, and by definition there is no way to know what they will be, so in one sense they're a wash. Still, if you wanted to do worst-case or best-case scenarios, you could look at the recent historical volatility of the various factors and choose the worst/best values likely to play out in a perfect storm. With unhedged bonds the major problem is often exchange rates, though governments sometimes make surprisingly jarring moves on dividend taxation, too.

That's just in general, because it's a very broad question. You can dampen some of that by using a fund diversified across currencies and jurisdictions, some funds strive to maintain a constant dividend while others just pay market rates, some structured products actually change behavior depending on rates, etc, etc.
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rick51
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Re: Dividends on foreign funds, estimating current year

Post by rick51 »

I’m thinking specifically Vanguard’s Total International Stock Fund from a tax and impact on income standpoint.
AlohaJoe
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Re: Dividends on foreign funds, estimating current year

Post by AlohaJoe »

rick51 wrote: Fri May 07, 2021 2:40 pm What’s the most accurate approach to estimate the dividends that an international/foreign fund may distribute in the current year?
The most accurate approach is to look up every single individual company in the fund, look up their past dividend payments; build a partial regression model based on their dividend history, local economic forecasts, industry forecasts, and so on; and then read every single forecast & adjustment notice they put out (translating it from their native language, naturally) in order to feed adjustments into your model.

If you read through academic papers on the National Bureau of Economic Research (NBER) that's the kind of thing you'll see there.

Why do you need "the most accurate approach"?
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rick51
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Re: Dividends on foreign funds, estimating current year

Post by rick51 »

I ran across an article discussing the pros and cons of international investing. It said that the estimated yield for this year is 1.?%, I can’t remember the exact % and can’t find the article, although how the author arrived at his estimate was not discussed. It did made me think that there might be an easy approach. Caulk it up to my curiosity. Anyway, thanks for the responses.
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goingup
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Re: Dividends on foreign funds, estimating current year

Post by goingup »

rick51 wrote: Fri May 07, 2021 8:44 pm I’m thinking specifically Vanguard’s Total International Stock Fund from a tax and impact on income standpoint.
To ballpark it, go to the Distributions tab for the fund. Look at last year's distributions per quarter. Add up 2020's quarterly per share distributions. Find out how many shares you own. Multiply your number of shares X the annual distribution. That number is ballpark for what you'll get in 2021.

Do that, then ask the forum how much tax you'll owe on the distribution, given your tax bracket. :D
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grabiner
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Re: Dividends on foreign funds, estimating current year

Post by grabiner »

goingup wrote: Sat May 08, 2021 8:28 am
rick51 wrote: Fri May 07, 2021 8:44 pm I’m thinking specifically Vanguard’s Total International Stock Fund from a tax and impact on income standpoint.
To ballpark it, go to the Distributions tab for the fund. Look at last year's distributions per quarter. Add up 2020's quarterly per share distributions. Find out how many shares you own. Multiply your number of shares X the annual distribution. That number is ballpark for what you'll get in 2021.
Note that foreign dividends were cut significantly in 2020; the 2021 dividends may be higher.
Wiki David Grabiner
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