Dividend Stock Investment: In-Depth Guidance for Beginners Who Want Stable Income Returns

Why Choose Dividend Stocks

When the stock market is relatively quiet and prices are not moving much, it feels like sitting idle with your investments is a waste. So why not try investing in a way that provides a steady flow of cash? That’s what dividend stocks offer. You receive income from holding shares, similar to a fixed deposit, but with the added benefit that your capital has the potential to grow if stock prices increase in the future. Additionally, it gives you a real sense of ownership in the company.

What Are Truly Dividend Stocks?

Dividend stocks are shares of companies that have a policy of regularly paying profits to shareholders every year. The amount paid depends on the company’s profits and approval from the shareholders’ meeting.

Simple example: ABC Company announces a dividend of 1.75 baht per share, with the ex-dividend date on July 1. If you hold 10,000 shares of ABC and cross that date, you will receive 17,500 baht in dividends ( before 10% tax ).

Important: Dividends come from the company’s profits, not from deposited capital. The company divides its profit into two parts: one part reinvested, and the other returned to shareholders. That return is the dividend.

How Do Different Dividend Payment Methods Vary?

It’s not just cash payments. There are several types:

According to Payment Type

Cash: The most common. You receive real cash, after 10% tax.

Stock: The company issues new shares instead of cash, increasing your shareholding. But the total number of shares in the market also increases (dilute). The advantage is that the company retains cash.

According to Payment Frequency

Annual: Paid according to the regular fiscal year-end, usually within one month after the shareholders’ meeting approval.

Interim: Additional payments outside the annual dividend, suitable for companies with good profits paying twice a year.

Key Figures to Know Before Choosing Dividend Stocks

###Dividend Policy(

Each company has its own framework, e.g., INTUCH pays 100% of dividends from subsidiaries, while PTT pays no less than 25% of net profit.

If INTUCH has EPS of 3.3 baht, it’s likely to pay 3.3 baht per share, while PTT with EPS of 2.64 baht might pay no less than 0.66 baht.

)Dividend Payout Ratio###

Formula: (Dividend per share / Net profit per share) × 100

Example: In 2022, INTUCH paid 4.72 baht with EPS of 3.28 baht → 144% ratio (meaning it paid more than it earned that year, using retained earnings)

PTT in 2022 paid 2 baht with EPS of 2.64 baht → 75% ratio (very reasonable)

(Dividend Yield)

Formula: ###Dividend per share / Current stock price( × 100

Example: INTUCH pays 4.72 baht, closing price 72.75 baht → Yield = 6.5%

Important: If you buy at a lower price, such as 50 baht, your actual return will be 9.44%. So, timing your purchase is very important.

Incredible High Dividend Stocks? Beware of Traps

Many people chase high dividend stocks because they’re caught in traps. Here are things to avoid:

) 1. Choose companies that are truly profitable

Dividends come only from profits. Therefore, companies with strong fundamentals and sustainable profitability are a first line of defense. If a company isn’t profitable, there are no dividends.

( 2. The payout ratio should be reasonable, not too low

Too low a ratio isn’t worthwhile. At minimum, it should be above 2% inflation annually to preserve your money’s value.

) 3. Beware of excessively high ratios

A miraculous high dividend paid regularly? Not likely. It may be paid from accumulated profits that will run out soon, or it could be a one-time payout. Many receive high dividends 2-3 times but then endure prolonged stock price declines.

4. Check long-term payout history

Don’t just look at one year. Review the past 5-10 years to see if the company pays consistently. Consistent payments indicate a strong financial base.

5. Manage your purchase timing

Two people buy the same stock at 1 baht per share:

• Person A buys at 5 baht → yield 20%
• Person B buys at 6 baht → yield 16.6%

Therefore, the better the timing of your purchase, the higher your return.

Steps to Start Investing in Dividend Stocks

Step 1: Open a stock trading account

Contact a broker, prepare a copy of your ID card and bank account. Approval takes 1-5 business days.

Tip: Register for E-Dividend at the same time to have dividends automatically transferred to your account.

Step 2: Deposit funds into your account

Once approved, transfer money to your stock account. You’re now ready to trade.

Step 3: Select dividend stocks and monitor

Before buying, do your homework. Use Technical Charts to analyze price trends or Fundamental Analysis to evaluate attractive prices. Follow your Watch List of stocks you’re interested in. When the price reaches your target, buy.

Step 4: Monitor company performance

While holding stocks, track the company’s performance, dividend announcements, and ex-dividend date.

Very important: Ex-dividend date ###Exclude Dividend### = buying on that day means no dividend, because the ex-dividend mark indicates “not including dividends.”

Step 5: Receive dividends

After the shareholders’ meeting approves the payout, the money will be credited to your E-Dividend account within one month. The dividend amount is subject to 10% tax (and can be used for tax deductions at year-end).

Frequently Asked Questions

Q: How many days before the ex-dividend date do I need to buy to receive dividends?
A: You can buy any day before. However, buying on or after the ex-dividend date means you won’t receive that round’s dividend.

Q: Where can I check dividend stocks?
A: Check the dividend payout ratio ###Dividend Payout Ratio( or dividend yield on set.or.th. Look at the SETHD index, which includes the top 30 high-dividend stocks, or filter by companies with high profits and high dividend policies.

Q: When is the best time to buy for maximum returns?
A: According to market efficiency, stock prices tend to absorb dividend news already. It’s better to buy when prices dip before the dividend announcement, rather than after, when prices tend to rise.

Summary

Investing in dividend stocks is suitable for those seeking a steady income stream without missing out on capital appreciation. If you avoid common traps, choose profitable companies, manage your purchase timing, and track long-term payout history, you can build a stable and sustainable dividend stock portfolio.