Thursday, February 23, 2012

Dividend Increase: NVS

One of my dividend-growth stocks, Novartis (NVS), increased its annual dividend by 2.3% today, raising the payment from CHF 2.20 to CHF 2.25 per share (CHF = Swiss Franc). This marks the company's 15th consecutive year of dividend growth in CHF.

I will not know the exact amount of the dividend in U.S. dollars (USD) until I receive it. However, with the current exchange rate being 1 CHF = 1.1059 USD, that gives an estimated amount of $2.4884. My understanding is that last year's amount was $2.3527, so the dividend increase in USD would be about 5.8%.

Given that I own 35 shares of NVS, my annual dividend will be about $87.09 before tax or $56.61 after the 35% foreign tax is withheld (which I can claim when I file my U.S. income taxes). I am not a fan of the dividend being paid annually (rather than quarterly) or the foreign tax withholding, but I can live with it. This dividend increase boosts my yield on cost to 4.44%.

Update (April 10): I have now received my NVS dividend. My estimates were pretty close -- it was $86.88 before tax and $56.47 after the 35% foreign tax withholding.

5 comments:

  1. I actually hold NVS as well, however the foreign tax withheld is 15% for U.S. holders and that is tax deductible. This is a quote for a seekingalpha article I read:

    "Switzerland based companies, withhold 15% of any distributions made to US investors at source. US investors can deduct the 15% withholding on the US tax returns however. As a result, holding shares of Novartis in a tax-deferred account is not advisable, since no tax credit can be claimed on such accounts."

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    1. Hi austinbroker,

      Thanks for your comment. I had the understanding that it was 35%, but if it is only 15% that would be much better. I will inevitably find out when I receive my NVS dividend in April. I hold the stock in a taxable account, so I will be able to claim the foreign tax paid when I file my U.S. tax return.

      Cheers,

      Deedubs

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  2. I have NVS shares. In the recent tax form, the tax withhold is 35%, not 15%.

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    1. lake forest: I have also had 35% tax withheld for NVS. Fortunately, I can claim it when I file my tax return.

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  3. Not sure why anyone was taxed at 35%, I am a US holder of the stock and the foreign tax was 15%. I presume this can be used as a deduction, not a tax credit.

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