Dividend strategy: income instead of growth

A dividend strategy is a choice about the form your return takes, not a way to earn more. You agree to receive part of a company's result as cash in your account, rather than leaving it inside the business and waiting for the share to be re-rated. The market pays no premium for that decision: at the moment of payment the market capitalisation shrinks by the amount that has gone to shareholders, and the share's opening price after the record date reflects it. All you are really choosing is the predictability of the cash flow and the way it is taxed.

What exactly you are buying

A dividend is neither interest on a deposit nor a coupon. It is a distribution of profit, decided by the shareholders' meeting on the recommendation of the board of directors. There is no legal obligation to pay: there is a dividend policy — a document in which the company describes the base for the calculation (net profit, adjusted profit, free cash flow), the share of that base, and the conditions under which the payout is reduced or not made at all. The quality of the strategy starts here, not on a screen ranking stocks by yield.

The policy should be read for three things (and it is customary to look at them in exactly this order). First: what figure the payout is calculated from — reported profit is easily distorted by non-recurring items, while cash flow is harder to distort. Second: whether there is a leverage limit above which the payout is cut. Third: what the company did in a bad year — not what it promised, but what it did. The sources for this check are the financial reports section and the payout history in the dividend section.

The record date: the mechanics most often misunderstood

The record date determines who on the register receives the payout. The share has to be bought with the trade settlement cycle in mind, otherwise the right to the dividend goes to the seller. On the morning after the record date the price opens lower — this is not a fall and not a signal, but arithmetic: cash has left the value of the business. That is why "buy before the record date, sell after" is not a strategy, but an exchange of part of the price for a payout from which tax will be deducted.

The gap sometimes closes, and this has a name — the price recovery after the payout. But it is a consequence of overall demand for the share, not a mechanical property of the dividend. To bet on the gap closing as if it were a rule is to make a bet on the market without calling it that.

The yield you lock in and the yield you see

The dividend yield in any table is calculated from the current price and the past payout. What matters to you is a different figure: the payout of the coming period relative to the price at which you bought. The first figure changes every day without any involvement from the company — when the price falls, it rises, and this is exactly how a dividend trap is born: a high reading in a screener often means that the market has already priced in a cut to the payout.

A dividend yield cannot be compared directly with the yield to maturity on a bond. Yield to maturity is a contractual figure, provided the bond is held to the end and the issuer remains solvent. Dividend yield is an estimate built on a forecast of a decision that has not yet been taken. A proper comparison requires bringing both to an after-tax basis and allowing for reinvestment; the base for personal income tax on investment income is set by 13%, and tax on dividends is withheld at source rather than deferred until the sale, as it is for capital gains.

When the strategy loses to its competitors

A dividend portfolio has a direct competitor — the debt market. When the cost of money in the economy is high, the fixed coupon on OFZ begins to exceed the expected dividend payout at incomparably lower risk: a coupon decision is not overturned at a shareholders' meeting. This relationship should be checked not against a slogan, but against the shape of the yield curve and the path of the policy rate — the transmission mechanism is described in the article on the key rate.

The second weakness is concentration. Companies that pay consistently in Russia are clustered in a handful of sectors that depend heavily on the commodity cycle and the exchange rate. A portfolio assembled on the principle of "pays a lot" almost always turns out to be a sector bet rather than a diversified set of holdings.

How to run such a portfolio

A useful way to assess the result is to track not the sum of the payouts received, but a total return index: the change in price plus the payouts, with their reinvestment taken into account. Otherwise a dividend portfolio looks profitable even when the capital is shrinking. How to calculate this honestly is covered in the article on the demo account and portfolios, and what remains after money loses its value — in the article on real return.

A working sequence of steps: select companies by their policy and the resilience of their cash flow, not by a yield ranking; spread them across sectors; check the expected dates against

And the payout calendar; decide in advance where the incoming cash will go, because a payout that is not reinvested stops working for you on the day it is credited.

What this article does not provide: assessments of specific shares and payout forecasts. Such numbers live in instrument pages such as SBER and in the stocks section, and are updated as reports are published and meetings take their decisions — and by the time you read this text, any figure fixed in prose would already be wrong.