Sj Oh

22 Sep 2020

∙

General Investing

When sti etf drops to a price that is lower than what I bought , does it affect the dividends?

I know the value drops...but number of shares I hold remains right unless I sell , then the paper losses will be actualised ?

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Yang Teng

22 Sep 2020

No, it shouldn't.

Dividends are a portion of the company's profit paid out to shareholders. What affects dividends is cashflow. Changes in profitability and costs affect the dividend payout. Changes in share price, however, do not affect these.

The recent cases of companies announcing dividend cuts during the market downturn are not due to falling share price, but due to fall in earnings due to the pandemic.

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