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How does dividend work with Japanese stocks
Posted: Tue Jun 01, 2021 4:27 am
by mclaird
Hello everyone,
I am fairly new to investing and I am currently interested into developing a "snowball" effect with dividends. I am interested to invest into the Japanese market but due my limited language skills I am mostly dependent of what my partner, who got me into investing, recommends.
I aim to develop a portfolio where I have medium to high yield Japanese stock dividends and also if there is any option to "reinvest" the dividend automatically, without incurring into a taxable event such as a new purchase of stock or ETF, for example.
I currently use Rakuten Securities for NISA and stock trading.
Thank you for your time.
Re: How does dividend work with Japanese stocks
Posted: Tue Jun 01, 2021 5:43 am
by beanhead
The dividend just gets put into the cash part of your Rakuten Securities account.
There is not the option to automatically re-invest it.
As you probably know, Japanese stocks are generally sold in a minimum of 100 stocks.
So the dividend payments are generally not enough to buy the minimum number of 100 shares.
The tax of 20.something per cent is automatically taken if your stocks are in your tokutei account.
If you want to avoid paying this tax and get the automatic re-investment, index funds are the better bet. The dividend payments which are paid by the companies included in the fund are automatically re-invested. But no nice psychological high from getting the dividend payment.
I have a few Japanese stocks in my portfolio. My strategy is just to add up these small dividend amounts once or twice a year and then buy something with them - either US stocks or small portions of eMaxis Slim S&P 500 or All-Country.
Re: How does dividend work with Japanese stocks
Posted: Tue Jun 01, 2021 6:52 am
by zeroshiki
For mutual funds there is actually an option for re-investing. When you purchase it, you can set the 分配金コース to 再投資型 instead of 受取型 which I assume does the reinvestment for you. The Rakuten default is reinvestment though (and that's assuming the mutual fund you bought even has dividends)
Re: How does dividend work with Japanese stocks
Posted: Wed Jun 02, 2021 1:54 am
by beanhead
zeroshiki wrote: ↑Tue Jun 01, 2021 6:52 am
For mutual funds there is actually an option for re-investing.
This is correct, but the poster indicates that he or she is interested in "high yield Japanese stock dividends". As you point out most (all?) mutual funds available here re-invest any dividends.
I purchase eMaxis Slim, eMaxis Neo and some of the Rakuten Vanguard wraps, and there are no visible dividends available from any of them.
SoftBank, Itochu, Japan Post etc etc, on the other hand, will give you these dividends.
Advantages: visible income. No need to sell to get a return.
Disadvantages: taxed. No automatic re-investment option. Not diverse so higher risk than the mutual fund path.
Re: How does dividend work with Japanese stocks
Posted: Thu Jun 03, 2021 3:57 am
by mclaird
beanhead wrote: ↑Tue Jun 01, 2021 5:43 am
The dividend just gets put into the cash part of your Rakuten Securities account.
There is not the option to automatically re-invest it.
As you probably know, Japanese stocks are generally sold in a minimum of 100 stocks.
So the dividend payments are generally not enough to buy the minimum number of 100 shares.
The tax of 20.something per cent is automatically taken if your stocks are in your tokutei account.
If you want to avoid paying this tax and get the automatic re-investment, index funds are the better bet. The dividend payments which are paid by the companies included in the fund are automatically re-invested. But no nice psychological high from getting the dividend payment.
I have a few Japanese stocks in my portfolio. My strategy is just to add up these small dividend amounts once or twice a year and then buy something with them - either US stocks or small portions of eMaxis Slim S&P 500 or All-Country.
Thank you for your reply. Yes I am aware of the 100 stocks situation. I have very limited information about what is the recommended strategy with Japanese stocks but at the moment I have my tsumitate NISA set to eMaxis Slim All Country.
If it is ok to ask to go a bit more in detail about your Japanese stocks approach? or if there is a recommended place to research more in the topic? currently I am aiming for ORIX and railroads such as Keihan and JR but only by gut, and I would prefer to do a most educated decision on the matter before I pull the trigger.
Re: How does dividend work with Japanese stocks
Posted: Thu Jun 03, 2021 4:03 am
by mclaird
zeroshiki wrote: ↑Tue Jun 01, 2021 6:52 am
For mutual funds there is actually an option for re-investing. When you purchase it, you can set the 分配金コース to 再投資型 instead of 受取型 which I assume does the reinvestment for you. The Rakuten default is reinvestment though (and that's assuming the mutual fund you bought even has dividends)
Thanks for your reply. From your comment I assume that is rare to find mutual funds to provide dividends? what would be the difference between index funds and mutual funds?
beanhead wrote: ↑Wed Jun 02, 2021 1:54 am
zeroshiki wrote: ↑Tue Jun 01, 2021 6:52 am
For mutual funds there is actually an option for re-investing.
SoftBank, Itochu, Japan Post etc etc, on the other hand, will give you these dividends.
Advantages: visible income. No need to sell to get a return.
Disadvantages: taxed. No automatic re-investment option. Not diverse so higher risk than the mutual fund path.
In case of proceeding with stocks, any recommendation on how to spot a good option or where people discuss this topic in an actively manner? I am also considering the mutual fund path, but I feel before making a decision I need to have an educated evaluation. One of my goals for purchasing stocks or Japanese funds (if these exist in any way) is to directly receive gains to yen and also to use them as leverage on my application for Japanese citizenship. I was previously advised that is favorable to apply after possessing certain amount of Japanese-based assets.
Re: How does dividend work with Japanese stocks
Posted: Thu Jun 03, 2021 5:56 am
by beanhead
mclaird wrote: ↑Thu Jun 03, 2021 3:57 am
If it is ok to ask to go a bit more in detail about your Japanese stocks approach? or if there is a recommended place to research more in the topic? currently I am aiming for ORIX and railroads such as Keihan and JR but only by gut, and I would prefer to do a most educated decision on the matter before I pull the trigger.
I am not sure that you want to follow my 'strategy' much, but for what it is worth:
I did a screen for high dividend payers with Rakuten. Then I filtered that by cost. I am not comfortable with investing 500,00yen or 700,000yen in stock of one company, so I looked for some of the cheaper options.
I removed the REITs from the search results and then also made sure I looked only at companies I know a little bit about and consider 'solid' and stable.
2 immediately sprung out, MUFG and Sojitz. Both cheap, decent dividend, and probably not going to go bankrupt any time soon.
Others of interest to me are Orix and some of the other trading companies - Itochu, Sumitomo etc. My view is that the trading companies are so well-diversified that they are pretty unlikely to go bust.
7 Bank also comes up quite well in the low-price/decent dividend search but I don't really know what their position is in the market here. I use their ATMs, but don't know if they are a decent investment or not. So I ruled them out. SoftBank is also a contender, with 6% yield (?)but I do not invest in them (yet)
So, that's about it. Low-price, high-dividend and then the key, the 'I've-heard-of-them-and-have-some-idea-of-what-they-do' metric!
The Japanese dividend stock part of my portfolio is small and experimental. Plan is to give it a year or two, see how the dividends are, and then decide to continue or go to 100% mutual funds and forget the dividends. I have a few U.S. dividend stocks as well, but those dividends of course get taxed even more than Japanese stocks.
I am not sure if that is helpful or not.
Re: How does dividend work with Japanese stocks
Posted: Thu Jun 03, 2021 8:00 am
by RMA
I am also currently looking for high dividend paying Japanese stocks. As Japanese stocks have minimum order qty of 100 shares and I do not want to invest too much into this so I started looking for high dividend paying Japanese ETF/Mutual Funds.
Couldn't find Mutual Funds but found ETFs here:
https://shintaro-money.com/japan-high-dividend-etf/
Out of these, I prefered iShares MSCI Japan High Dividend ETF (1478) mainly because of low trust fees and details in english (
https://www.blackrock.com/jp/individual ... vidend-etf).
Now if I don't find any better alternative, I am buying this ETF at next opportunity.
Re: How does dividend work with Japanese stocks
Posted: Sat Jun 19, 2021 9:45 am
by MisoSoup
beanhead wrote: ↑Thu Jun 03, 2021 5:56 am
mclaird wrote: ↑Thu Jun 03, 2021 3:57 am
SoftBank is also a contender, with 6% yield (?)but I do not invest in them (yet)
I'm not sure where you get this information from. But recheck it, if you think Softbank are paying anything like 6%.
Re: How does dividend work with Japanese stocks
Posted: Sat Jun 19, 2021 9:51 am
by MisoSoup
beanhead wrote: ↑Thu Jun 03, 2021 5:56 am
SoftBank is also a contender, with 6% yield (?)but I do not invest in them (yet)
I don't think you'll get 6% from Softbank.