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Telefónica, S.A Message Board

  • betcsbirds betcsbirds Jan 21, 2011 3:19 PM Flag

    TEF Dividend

    Can anyone tell me if the dividend is changing in conjunction with the stock split?

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    • pointeprinting Mar 17, 2011 8:45 AM Flag

      I use Turbo Tax to fill out the 1166 form. For an non accountant that form would be almost impossible to fill out.

    • I would like to understand your comments better about losing most of the credit if you file a form 1116. I put in a number for foreign income and tax that was high enough to reflect my purchasing more shares and dividend growth. I did not see a reduction in credit of any material amount. However given that they do ratios using US taxes paid to US income it looks like persons in a lower tax bracket would be penalized by this computation. That ratio would set a lower upper bounds on the percent of foreign tax that could be recouped vs. a person who was in a higher tax bracket.
      Does this make sense?

      Also it seems like it gets extremely ugly if one has to use foreign income tax to offset US capital losses. It looks like there are restrictions such that only if you end up with a lot of income in a given year and you have capital losses will you be forced to hire an accountant to figure it all out.


    • Excellent information from all. Thank you!

    • Actually what you have is a very good stock pick that you have held onto. If you pull up a 10-year chart of the S&P 500 you will see two very large 50% drops in the last 10-years. This argues to keep some cash in reserve to buy more good stocks when the market "crashes." Or to make sure you do some asset allocation to keep 30% money markets, CDs and 2-year to 10-year notes. The S&P 500 is actually down over the last 10-years -- not a good way to preserve capital.

      Put TEF up on the same chart. You will see that TEF underperformed and then outperformed the S&P 500 until about 2006. Then TEF really took off and has outperformed the S&P 500.

      Reinvesting dividends gives 40-60% of the return that you can attribute to stocks. If you have reinvested the dividends, you would be buying some stock at low prices, some at high prices and some at average prices. But you would have a much bigger pot of TEF gold.

      Bear with me now and put S up on the 10-year chart. This shows that holding onto an individual stock can really waste away capital, so you need to be very careful. A friend of mine sat on S from $20+ to the recent ~$4. this is quite a hit to your capital and much more likely to happen to an individual stock than the market overall. So, check up on your long term investments and get out as the story changes to bad from good.

      I like TEF albeit at lower prices. With a market cap of $344 billion, it may slow down just due to its large size.

    • just remember, whatever dividend you see posted for TEF will always be reduced by 19% spanish withholding and the 2 cent per share citigroup rip-off. that doesn't even begin to include the total unpredictability of the exchange rate of the euro.

    • by the way, my foreign tax credits always exceed the $600, but I do better just claiming the $600 limit rather than doing form 1116 and no one says you have to claim the full amount of your foreign taxes paid, i.e. the irs won't complain if you don't claim the full total reported to you on forms 1099.

    • Dividend will be one third of what it was. But now, it is easier to figure out since the underlying and ADR are 1:1. 0.65€ twice last year but they have indicated they will try to do 0.70€ twice this year. Might wind up being 0.65€ for the first dividend and then 0.70€ for the second dividend.

      Euro is currently 1.35-ish so that would be 0.65€ * 1.35 = $0.8775 and 0.70€ * 1.35 = $0.945. This is of course before the Spanish withholding tax and any fees charged by the ADR holder. I will seriously consider selling TEF if it is too high right before the dividend in my tax deferred accounts.

15.07+0.20(+1.34%)Dec 18 4:03 PMEST

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