Question regarding AMAZING dividends

[LeavingOhio]

I've been investing for a long time, but I'm no expert. I always enjoy seeing the dividend portion of my fund contributions, but this past December, the dividends I received were HUGE compared to what I've seen in the past - more than 4 times what I've ever seen.

Do any of you have any idea why that might be? Also, why are my dividends typically so much larger in December than any other month?

Thanks!

 

[Animorph]

I'm up maybe 10%. You must be picking the right kind of securities. If you are talking about mutual funds, many distribute dividends and capital gains only in December, Many ETF's do that as well.

 

[Dimsumkid]

I think you're referring to the concerns of the fiscal cliff tax hikes. Some companies moved one or more 2013 dividend payments into 2012 to avoid it. For example, Oracle decided to move 3 dividend payments for 2013 into Dec 2012. If you do a little digging, I'm sure that's what happened to your holdings

 

[Tyro]

I noticed this and asked a similar question earlier in December -- http://www.early-retirement.org/forums/f28/mf-fiscal-cliff-cg-distributions-64036.html

Tyro

 

[audreyh1]

I've been investing for a long time, but I'm no expert. I always enjoy seeing the dividend portion of my fund contributions, but this past December, the dividends I received were HUGE compared to what I've seen in the past - more than 4 times what I've ever seen.

Do any of you have any idea why that might be? Also, why are my dividends typically so much larger in December than any other month?

Thanks!

1. Most mutual funds pay out capital gains distributions once a year - usually in December. They may pay dividends out more regularly - quarterly or monthly.

2. In years with a rise in stock markets, equity mutual funds often do more stock selling/portfolio repositioning, so this often results in higher capital gains distributions in "good" years.

 

[audreyh1]

I think you're referring to the concerns of the fiscal cliff tax hikes. Some companies moved one or more 2013 dividend payments into 2012 to avoid it. For example, Oracle decided to move 3 dividend payments for 2013 into Dec 2012. If you do a little digging, I'm sure that's what happened to your holdings

This affected stocks, not really mutual funds. But I did have a few mutual funds pay out an "extra" dividend distribution in the last few days of the year, so I suspect they were trying to catch up with the extra stock qualified dividends from Dec 2012. I actually had 6 different mutual funds over 4 different fund families do this on 12/27 and 12/28.

But these were dividend distributions, not capital gains distributions.

 

[LeavingOhio]

I noticed this and asked a similar question earlier in December -- http://www.early-retirement.org/forums/f28/mf-fiscal-cliff-cg-distributions-64036.html

Tyro

Ah...I see. Very interesting. I guess this means that my dividends might be less for 2013. It's all very odd. I'm glad to have the big dividends now though.

 

[scrabbler1]

One of my (corporate) bond mutual funds paid out an extra amount in its monthly dividend the last few Decembers (but not in 2012) due to some reason I could never quite figure out. This was reflected in the daily Mil Rate which for one day in the middle of those prior Decembers by a "spike" in said rate. I wonder how widespread this is in other bond funds, corporate or government.

 

[anethum]

Besides "early" dividends, some companies issued special dividends in addition to their regular quarterly dividends.

 

[audreyh1]

I had a lot of bond funds pay out capital gains distributions in 2012. I assume they were taking profits due to the high appreciation of bonds in 2012. This doesn't happen very often.

 

[Dimsumkid]

This affected stocks, not really mutual funds. But I did have a few mutual funds pay out an "extra" dividend distribution in the last few days of the year, so I suspect they were trying to catch up with the extra stock qualified dividends from Dec 2012. I actually had 6 different mutual funds over 4 different fund families do this on 12/27 and 12/28.

But these were dividend distributions, no capital gains distributions.

I'm not sure why you don't think this would affect mutual funds too. From everything I've seen, mutual funds were doing special/extra distributions for the same reason - to avoid the fiscal cliff tax hike.

 

[audreyh1]

I'm not sure why you don't think this would affect mutual funds too. From everything I've seen, mutual funds were doing special/extra distributions for the same reason - to avoid the fiscal cliff tax hike.

No - mutual funds can't pull dividend distributions out of thin air. They only pass through stock or bond dividends paid to them. As for capital gains distributions - those are because they sold some stocks or bonds during the year and realized gains.