How much do you have to pay in total?

If you buy 1000 shares of X at RM 4, how much do you have to pay in total?

Assuming that that brokerage fee is 0.10% or minimum RM 10

Total Commission + Fee
= Brokerage fee + Clearing fee + Stamp duty
= (RM 4 x 1000 x 0.10% or min RM 10) + (RM 4 x 1000 x 0.03%) + RM 4
= RM 10 + RM 1.2 + RM 4
= RM 15.20

Total Purchase price = RM 4000 + RM 15.20 = RM 4015.20

Payout ratio

A stock’s payout ration measures how much of a company’s profit is paid out in dividends.

A company earning $2 per share in profits and paying out $1 share in dividends has a payout ratio of 0.5 ($1 divided by $2)

Forward-looking payout ratio:

The latest quarterly dividend payment for X is $0.50 per share.

Thus, the annual indicated dividend is $ 2 ($0.50 x 4 quarters)

The analysts’ consensus earnings estimate for the fiscal year is $4 per share

Thus, the forward-looking payout ratio would be 0.5 ($2 in per-share dividend/ $4 in per-share profits)

Source: The little book of Big Dividends – A safe formula for guaranteed returns (by Charles B. Carlson)

Are you entitled to the dividend?

On Nov 10, 2009, X declares a dividend payable on Dec 30, 2009 to its shareholders. X also announces that shareholders of record on the company’s books on or before Dec 1, 2009 are entitled to the dividend.

The stock would then go ex-dividend two business days before the record date.

In this example, the record date falls on a Tuesday. Excluding weekends and holidays, the ex-dividend is two business days before the record date – in this case, on the preceding Friday, Nov 27.

Anyone who bought the stock on Friday or after would not get the dividend (the dividend goes to the seller of the shares).

Those who purchase before the ex-dividend date receive the dividend.

Ex-dividend date is the date in which the stock price adjusts to reflect the next dividend payment. And, if you want the dividend payment, you have to buy the stock prior to the ex-dividend date.

Summary:
Declaration date: Nov 10, 2009
Ex-dividend date: Nov 27, 2009
Record date: Dec 1, 2009
Payable date: Dec 30, 2009

Source: The little book of Big Dividends – A safe formula for guaranteed returns (by Charles B. Carlson)

Stamp duty

The stamp duty chargeable on transactions on the stock market of Bursa Malaysia is:

RM1.00 for RM1000.00 or fractional part of value of securities (payable by both buyer and seller), and effective 17 March 2003, the stamp duty shall be remitted to the maximum of RM200. (Source: klse.com.my)

Contract value is RM 1 to RM 1,000; Stamp duty is RM 1
Contract value is RM 1,001 to RM 2,000; Stamp duty is RM 2
Contract value is RM 2,001 to RM 3,000; Stamp duty is RM 3
Contract value of RM 200,000 and above; Stamp duty is RM 200

Calculation of clearing fee

Source: http://1-million-dollar-blog.com

Clearing fee is charged by Bursa as the clearing house. The fee is 0.03% from the contract value or value of shares but subjected to a maximum of RM 1,000.

Calculation of Brokerage Fee

For investors buying low volume, there is a minimum charge per counter.

For example, Jupiter's online brokerage fee is minimum RM 8 while the brokerage rate is 0.05%.

If you want to buy 100 share of stock X at RM 4, the calculation is as follow:

RM 4 x 100 x 0.05% = RM 0.20

As RM 0.20 is below RM 8, the brokerage fee is RM 8

T+3

Transaction day + 3 trading day

The due date for payment is 3 trading days after transaction.

E.g.: If you bought your stock on Tuesday, the due date for payment is on Friday, before 12.30pm.

Limit and market orders

When you place a limit order, it has to be executed at the limit price or better.

When you place market order, it has to be executed at any price within the upper and lower limit price.

To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled. (Source: possibleinvestment.com)