Terms -Dividend Yield

Dividend Yield

DEFINITION of 'Dividend Yield'

A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated as follows:

Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends.

Investors who require a minimum stream of cash flow from their investment portfolio can secure this cash flow by investing in stocks paying relatively high, stable dividend yields.

To better explain the concept, refer to this dividend yield example: If two companies both pay annual dividends of $1 per share, but ABC company's stock is trading at $20 while XYZ company's stock is trading at $40, then ABC has a dividend yield of 5% while XYZ is only yielding 2.5%. Thus, assuming all other factors are equivalent, an investor looking to supplement his or her income would likely prefer ABC's stock over that of XYZ.

Read more: http://www.investopedia.com/terms/d/dividendyield.asp#ixzz3chfHR89j

VAB -Canadian Bond ETF

Terms- All Cap Fund

All-Cap Fund

DEFINITION of 'All-Cap Fund'

A stock mutual fund that invests in equity securities without regard to whether a company is characterized as small, medium or large.

The term "cap" is shorthand for capitalization. The investment community measures a company's size by its market capitalization, which is calculated by multiplying the number of a company's outstanding shares by its current stock price.

There is no universal consensus on the exact definitions of the various market caps, but the following parameters are a good approximation:

Giant or Mega Cap: Above $200 billion
Large Cap: From $10 billion to $200 billion
Mid Cap: From $2 billion to $10 billion
Small Cap: From $300 million to $2 billion
Micro Cap: Less than $300 million

These designations inform mutual fund investors about the investment focus of the fund in terms of company size. In the case of an all-cap fund, the portfolio manager has complete freedom to invest in companies of any size.

Because of the inclusive nature of its holdings, a total stock market index fund would have an all-cap portfolio.

Read more: http://www.investopedia.com/terms/a/allcapfund.asp#ixzz3cgrIEx2R

Terms -Yield on Cost

Yield On Cost - YOC

DEFINITION of 'Yield On Cost - YOC'

The annual dividend rate of a security divided by the average cost basis of the investments. It shows the dividend yield of the original investment. If the number of shares owned by the investor does not change, the yield on cost will increase if the company increases the dividend it pays to shareholders; otherwise it will remain the same.


To calculate yield on cost for a stock, an investor must divide the stock's annual dividend by the average cost basis per share and multiple the resulting number by 100 (to get a percentage).


For example, an investor who purchased 10 shares of stock at $15 and 20 shares at $18 would have an average cost basis of $17/share ($15*10 + $18*20)/(10 + 20). If the annual dividend is $0.90 per share, the yield on cost would be 5.29% ($0.90/$17 * 100).

INVESTOPEDIA EXPLAINS 'Yield On Cost - YOC'

Because the yield on cost depends on the price paid for the investment, the same stock portfolio can have a different yield on cost if shares are purchased over a period of time. Many investors focus instead on current yield when comparing the dividends of different stocks.

Read more: http://www.investopedia.com/terms/y/yield-on-cost.asp#ixzz3cgm2jYHk
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See also Yield

Dealing with Capital Gains in ETFs

http://howtoinvestonline.blogspot.ca/2009/01/etfs-and-mutual-funds-calculating.html

http://www.theglobeandmail.com/globe-investor/investor-education/haunted-by-phantom-etf-distributions/article18225076/

In most cases, ETFs pay distributions in cash. However, occasionally an ETF will choose to reinvest some of its realized capital gains internally instead of paying the money out to unitholders.

Even though investors don’t receive these reinvested distributions directly, they still have to pay tax on them (assuming the ETF is held in a taxable account, of course).

Reporting income from ETFs is straightforward. Year-end brokerage statements and T3s list the total amount of interest, dividends and capital gains, and plugging these numbers into the appropriate boxes on one’s tax return is a simple affair.

The hard part is determining what portion of the capital gain was paid out in cash, and what portion – if any – was reinvested by the fund.

“It seems that the only reliable way to find out your reinvested capital gains distribution for any particular ETF is to go to the website for that ETF and check the detailed characterization for the distributions,” Mr. Lee-Sui said.

http://canadiancouchpotato.com/2013/04/04/calculating-your-adjusted-cost-base-with-etfs/

Being a DIY investor is easy when all your accounts are tax-deferred. As the April 30 tax deadline approaches, pretty much all you need to do is gather your RRSP contribution slips. But if you have nonregistered accounts, things are more complicated, even if you’re a Couch Potato who uses ETFs and index funds.

To begin with, you need to report any income you received during the year. This part is relatively easy: in February or March you should receive a T3 slip that includes a breakdown of the type of income you’ve received from your mutual funds or ETFs: dividends, reinvested distributions, and interest income. Just enter these amounts in the appropriate boxes on your tax return and your software—or your accountant—does the rest.

If you hold US-listed ETFs, you’ll receive a T5 slip from your brokerage: Box 15 contains the amount of foreign dividends you receive, and Box 16 will indicate the amount of foreign tax paid. Dividends from US and international companies are fully taxable as income, but you can recover the withholding tax by claiming the foreign tax credit on your return.

But there’s more to the story than simply reporting income. You also need to report any capital gains you may have incurred by selling an ETF at a profit. Conversely, if you sold an ETF for less than you paid, you can claim a capital loss, which can be used to offset other gains. Your net capital gains are then taxed at half your marginal rate.

The problem is, if you sell an ETF and incur a gain or loss you don’t get a T-slip in the mail with that information: you’re responsible for doing the calculation and reporting it accurately on your tax return. This calculation is not easy, because you likely made more than one purchase of the ETF over many months or years, paying a different price each time. You also need to account for reinvested distributions, return of capital, and other factors. Only when you have determined your adjusted cost base (ACB) can you determine your true capital gain or loss.

If you have a large and relatively complex non-registered portfolio, it’s probably best to have an accountant or tax advisor do this for you. Another option is to use ACB Tracking, a website that does custom calculations for a modest fee. But if you’re a DIY investor who enjoys this sort of thing, we want to help. Justin Bender and I have co-authored a white paper called As Easy As ACB, which walks you through the process step-by-step.

http://www.acbtracking.ca/price_list 2015:

Bundle	Number of Calculations	Price
1	10	$85
2	25	$195
3	50	$350
4	100	$595
5	250	$1125
6	500	$1495

We hope you’ll download the white paper and give us your feedback. Please remember it is not a substitute for professional advice, and you are responsible for ensuring the information you report on your tax return is accurate.