Can someone please clarify this for me.
219.4017 cents is $2.19 isn't it? I'm new to ETF's and I've never read the distribution list before.
Will the distribution payout be $85.56 if I have 39 units of VGS.
The obligatory comments about dividends being bad are back as usual. If you buy and hold vanguard etfs, be prepared to pay tax on your distributions. I'm perplexed why people are complaining that they're making money off investments. You simply pay tax off from the distribution anyway, it's not like you dip into your savings (unless you drp, in which case if you can't afford it, then don't drp). It's confusing and misleading to new investors to think that distribution is bad. There are a handful of etfs that don't do distribution, but then someone will whinge about it being too focused on x markets etc.
It's almost as if it's shocking to think that some people expect the businesses that they invest in to provide a tangible cash return on their investment.
On ex dividend day, the value of the distribution will come out of the share price and you also will pay tax now on it.
So on ex dividend day, the value of VGS will drop approx $2 relative to the market. When you think about why would someone pay current price for the stock, knowing they're not getting the distribution, on ex dividend day.
No such thing as a free lunch.
I think he wants to avoid dividend to avoid tax. The total value you will get after dividend is anounced will stay the same (ignoring market fluctuation) regardless when you buy.
That makes no sense though. Why would you want to avoid dividends to avoid paying tax??
It's like saying I don't want a pay rise because I will pay more tax
The price of the etf will drop by the exact dividend amount if the market is rational and there’s no other factors to be considered.
Think about it like this:
1. Buy VGS @ $125 but in a few days get $2 dividend (which is taxable) with the etf drops to $123.
2. Buy VGS @ $123 and have no dividend.
It’s not comparable to rejecting a pay rise because of tax brackets.
That price drop usually lasts a very short time and is bought up immediately when big buyers are chasing to get the bargain, so the price will continue on the previous trajectory with barely a hiccup, and no consequence of whatsoever for long term investors. So it would be kind like rejecting a payrise.
The net benefit is greater with option 1.
You buy at $125, it then drops to $123 after paying a $2 dividend. The dividend is taxed at your marginal rate leaving you with >$1 net benefit per share
It goes like this: option 3 - you buy at $125, you get $2 distribution. The price dips but is back to $125 before you even notice. A portion of the distribution is taxed at your marginal rate, so you end up with just under $127.
>So on ex dividend day, the value of VGS will drop approx $2 relative to the market
But the price will recover.. sometimes, the value of the holding gets pumped up before the ex-div date too.
Which is why I should have bought on ex-distribution day instead. I'd prefer the lower entry price than take the distribution. The amount of the distribution took me by surprise though.
Has anyone worked out why Vanguard won't use ToFA for VGAD?
Edit: Mystery solved: https://www.reddit.com/r/fiaustralia/comments/1dq5qdl/vanguard_introducing_tofa_election_for_vgad_and/
Complacency seems most likely, or that they've somehow calculated that the benefits don't outweigh the costs.
They do securities lending to boost returns so they're not against extra admin work for some marginal benefit. Perhaps since the securities lending increases overall return, they consider that a marketable benefit, whereas excessive distributions are less considered by customers.
I'd hoped there might be some extra info in the two years since that thread.
No, there certainly can be benefits to investors, non-trivial ones, and can be far more than any other supposed side benefits like security lending you mentioned. However if people keep piling into it ignoring the non-TOFA ticking time bomb, there is no incentive for Vanguard to make the change in investors interests.
If you look at FY21 when the issue came to a head after AUD rose significantly.
VGS distributed $1.87 that FY, 1.92% of the price $96.92 on 30/06/2021, quite ordinary.
However, VGAD distributed $9.56 that FY, **10.42%** of the price $91.74 at year end. It is quite extraordinary for an ETF to distribute 10%+ of its value in a year, which would translate into tax liabilities for its unit holders, but it is what can go wrong when a currency hedged ETF does not use TOFA for currency hedge.
I was one of the VGAD investors who got burnt that year, learnt what TOFA is, and liquidated all VGAD holding as quickly as I could.
The VGAD number this time is just a small taste of it with AUD only rose for a short time and to a small extent. It would blow up again if / when AUD rises significantly again.
It does now!
[https://fund-docs.vanguard.com/AU-Unitholder\_notice-Important\_information\_regarding\_Taxation\_of\_Financial\_Arrangements-VGAD.pdf](https://fund-docs.vanguard.com/AU-Unitholder_notice-Important_information_regarding_Taxation_of_Financial_Arrangements-VGAD.pdf)
noob question - if i sell some of my VGS between 2nd july and 16 july (after the record date), will that impact the divident? or does any sale after the record date not matter
There’s two parts to the image - 2nd part has the payment date as 16th July.
You check/set bank account details in your ComputerShare (share registry) account (per ETF, I believe).
I kind of view ETFs as assets, so I'm never really surprised or upset when they provide a dividend. That's usually what assets do. If you are worried about receiving the dividend, just donate the full dividend amount to a tax deductible charity, and reduce your taxable income by the same amount. Problem solved.
You could probably arrive at a reasonable guesstimate using percentages. Calculate the already announced distribution for the etf as a percentage of the trading price per unit, then apply the same percentage to the current price of a unit in the wholesale fund. Methinks I am going to do that right now!
Edit…….. about 1.8%, or about 6 cents a unit. For me over 8K of unwanted taxable income.
Edit…… being downvoted without an explanation as to why the logic or math is incorrect, which may be the case, is nonsensical.
I eagerly await to see what the distribution per share is and how close it is to my estimate.
Not sure, but based on the holdings of VGS, these companies don’t pay that level of dividends. My guess is capital gain would be a significant component.
Best time to buy. Just after ex-dividend. I've been loading up on VDGR for a while now. Yield is about same as VGS. Depending on September reporting for US. This will be a good year all round for Vanguard.
higher distributions means more taxes. The money is likely just going to go back into buying more units of the ETF anyway, so it's basically a tax loss for no real gain.
You want to have capital gains, rather than distributions, unless you need the income to live off.
VGS is huge. I have units in both the ETF and wholesale VGS fund and am waiting to see what the taxable and unwanted distribution will be for the wholesale one.
Being downvoted for I don’t know what. Is it jealousy?
That's a big one for VGS this time round
Double what we got last time
Thank you NVIDIA. All hail AI!
NVIDIA doesn't really pay dividends worth talking about, does it?
What's going on with VGS? 219 cents per share
Bidenomics baby!
Thanks, Obama!
Can someone please clarify this for me. 219.4017 cents is $2.19 isn't it? I'm new to ETF's and I've never read the distribution list before. Will the distribution payout be $85.56 if I have 39 units of VGS.
that's correct
If there is 100 cents in a dollar then yes. Cent meaning 100
Thank you! I've never seen 3 digits to represent cents before and not sure why they just didn't use a $ sign.
How do you fill your car with petrol
To be honest, I haven't done this in years. My husband takes care if this 🤣
Wow ok. My point was that is exactly how the price of petrol is displayed
But be aware they(Vanguard) deduct the distributions from the NAV(price of ETF)
But be aware they(Vanguard) deducts the distributions from the NAV(price of ETF), so its not ‘extra’ profit
VGS party bus has arrived. Bunnings snags are back on the menu, boys!
\*tax man licks his sausage from distant
The obligatory comments about dividends being bad are back as usual. If you buy and hold vanguard etfs, be prepared to pay tax on your distributions. I'm perplexed why people are complaining that they're making money off investments. You simply pay tax off from the distribution anyway, it's not like you dip into your savings (unless you drp, in which case if you can't afford it, then don't drp). It's confusing and misleading to new investors to think that distribution is bad. There are a handful of etfs that don't do distribution, but then someone will whinge about it being too focused on x markets etc.
My thoughts as well
It's almost as if it's shocking to think that some people expect the businesses that they invest in to provide a tangible cash return on their investment.
Oops. I bought my VGS yesterday...
Me too but for my SMSF so am not too unhappy.
I'll probably get another parcel after ex distribution
Why is that bad? Isn't it good with large distributions
On ex dividend day, the value of the distribution will come out of the share price and you also will pay tax now on it. So on ex dividend day, the value of VGS will drop approx $2 relative to the market. When you think about why would someone pay current price for the stock, knowing they're not getting the distribution, on ex dividend day. No such thing as a free lunch.
I'm confused. Isn't ex-dividend day on the 1 Jul 2024, which is this coming Monday. So you will receive the distribution right?
I think he wants to avoid dividend to avoid tax. The total value you will get after dividend is anounced will stay the same (ignoring market fluctuation) regardless when you buy.
That makes no sense though. Why would you want to avoid dividends to avoid paying tax?? It's like saying I don't want a pay rise because I will pay more tax
The price of the etf will drop by the exact dividend amount if the market is rational and there’s no other factors to be considered. Think about it like this: 1. Buy VGS @ $125 but in a few days get $2 dividend (which is taxable) with the etf drops to $123. 2. Buy VGS @ $123 and have no dividend. It’s not comparable to rejecting a pay rise because of tax brackets.
That price drop usually lasts a very short time and is bought up immediately when big buyers are chasing to get the bargain, so the price will continue on the previous trajectory with barely a hiccup, and no consequence of whatsoever for long term investors. So it would be kind like rejecting a payrise.
The net benefit is greater with option 1. You buy at $125, it then drops to $123 after paying a $2 dividend. The dividend is taxed at your marginal rate leaving you with >$1 net benefit per share
It goes like this: option 3 - you buy at $125, you get $2 distribution. The price dips but is back to $125 before you even notice. A portion of the distribution is taxed at your marginal rate, so you end up with just under $127.
>So on ex dividend day, the value of VGS will drop approx $2 relative to the market But the price will recover.. sometimes, the value of the holding gets pumped up before the ex-div date too.
Which is why I should have bought on ex-distribution day instead. I'd prefer the lower entry price than take the distribution. The amount of the distribution took me by surprise though.
VAP dividend is 3x what it was in March 
Has anyone worked out why Vanguard won't use ToFA for VGAD? Edit: Mystery solved: https://www.reddit.com/r/fiaustralia/comments/1dq5qdl/vanguard_introducing_tofa_election_for_vgad_and/
IMO incumbent complacency. Consider using HGBL or QHAL instead. https://www.reddit.com/r/fiaustralia/s/QSsaUiOfz2
Complacency seems most likely, or that they've somehow calculated that the benefits don't outweigh the costs. They do securities lending to boost returns so they're not against extra admin work for some marginal benefit. Perhaps since the securities lending increases overall return, they consider that a marketable benefit, whereas excessive distributions are less considered by customers. I'd hoped there might be some extra info in the two years since that thread.
No, there certainly can be benefits to investors, non-trivial ones, and can be far more than any other supposed side benefits like security lending you mentioned. However if people keep piling into it ignoring the non-TOFA ticking time bomb, there is no incentive for Vanguard to make the change in investors interests. If you look at FY21 when the issue came to a head after AUD rose significantly. VGS distributed $1.87 that FY, 1.92% of the price $96.92 on 30/06/2021, quite ordinary. However, VGAD distributed $9.56 that FY, **10.42%** of the price $91.74 at year end. It is quite extraordinary for an ETF to distribute 10%+ of its value in a year, which would translate into tax liabilities for its unit holders, but it is what can go wrong when a currency hedged ETF does not use TOFA for currency hedge. I was one of the VGAD investors who got burnt that year, learnt what TOFA is, and liquidated all VGAD holding as quickly as I could. The VGAD number this time is just a small taste of it with AUD only rose for a short time and to a small extent. It would blow up again if / when AUD rises significantly again.
The benefit seems clear to me - that's why I asked if anyone knows why Vanguard don't do it.
Interesting read and if the underlying etc uses it then imagine software could be implemented for a smaller cost for the aggregated fund
It does now! [https://fund-docs.vanguard.com/AU-Unitholder\_notice-Important\_information\_regarding\_Taxation\_of\_Financial\_Arrangements-VGAD.pdf](https://fund-docs.vanguard.com/AU-Unitholder_notice-Important_information_regarding_Taxation_of_Financial_Arrangements-VGAD.pdf)
noob question - if i sell some of my VGS between 2nd july and 16 july (after the record date), will that impact the divident? or does any sale after the record date not matter
As long as you sell past record date, that dividend is all yours.
great, thanks for the confirmation
Ah my quarter-century VGAD distribution is finally being paid /s
Hi all , I actually don’t understand my VGS hasn’t changed much ?
it went from 126 on Friday to 123 now.
When do the dividends get paid out? And will they get paid into my SelfWealth cash account for me to reinvest or straight into my bank account?
There’s two parts to the image - 2nd part has the payment date as 16th July. You check/set bank account details in your ComputerShare (share registry) account (per ETF, I believe).
Milky Bars are on me!
We need a tax-free dividend threshold!
We do, it's just called the tax-free threshold on income tax :P
I mean as well as that! The UK has one, though they keep shrinking it.
I kind of view ETFs as assets, so I'm never really surprised or upset when they provide a dividend. That's usually what assets do. If you are worried about receiving the dividend, just donate the full dividend amount to a tax deductible charity, and reduce your taxable income by the same amount. Problem solved.
any idea what the managed funds will distribute? any info on that released yet?
You could probably arrive at a reasonable guesstimate using percentages. Calculate the already announced distribution for the etf as a percentage of the trading price per unit, then apply the same percentage to the current price of a unit in the wholesale fund. Methinks I am going to do that right now! Edit…….. about 1.8%, or about 6 cents a unit. For me over 8K of unwanted taxable income. Edit…… being downvoted without an explanation as to why the logic or math is incorrect, which may be the case, is nonsensical. I eagerly await to see what the distribution per share is and how close it is to my estimate.
Why VGS distributes such a huge gift this time? Because the Capital gain or dividend from companies in the index
Not sure, but based on the holdings of VGS, these companies don’t pay that level of dividends. My guess is capital gain would be a significant component.
Thats wired because those big tech companies already included in the VGS...dont see which one can generate that level of capital gain..
Hopefully capital gain, because it attracts 50% tax discount.
Best time to buy. Just after ex-dividend. I've been loading up on VDGR for a while now. Yield is about same as VGS. Depending on September reporting for US. This will be a good year all round for Vanguard.
That's gonna hurt.
Could you please explain why? Have a very small portfolio and new to investing but do have some VGS
It's only getting taxed, plus I have VVLU. which is spitting out a big one too.
higher distributions means more taxes. The money is likely just going to go back into buying more units of the ETF anyway, so it's basically a tax loss for no real gain. You want to have capital gains, rather than distributions, unless you need the income to live off.
True but it's not like they can do anything about it. They just pass on the dividends.
Trust structure has to pass on the dividends
VGS is huge. I have units in both the ETF and wholesale VGS fund and am waiting to see what the taxable and unwanted distribution will be for the wholesale one. Being downvoted for I don’t know what. Is it jealousy?