Lopazz's Wallet

[Lopazz]

Hello everyone,

Securities account at Binck, with 2 cash compartments: EUR and USD.

Today, credit of 20,000 EUR and exchange transaction in USD

Balance: 25,038.94 USD or 19,995.40 EUR

Short-term buys: Colgate Palmolive, Coca Cola, McDonald's, Clorox

[Lopazz]

Today 05/29/2012:

Buy 133 KO at 75.64 $
Purchase 55 MCD at 91.60 $
Purchase 100 CL at 99.07 $

[Jerome]

It starts strong
keep some for later
How did you make your choice? The deadlines?

[Lopazz]

I am entering in tranches of 20,000 EUR, I plan to invest 100,000 EUR by the end of the year, and 500,000 EUR by the end of 2015. This programmed investment strategy will allow me to benefit from a possible decline in the EUR/USD (a theory in which I do not believe at all).

I did not make my choice based on the deadlines (I do not need the income generated at the moment) but based on the same criteria as you, and my personal convictions.

Next purchases: 20,000 $ split into 4 x 5,000 $ on MCD, LOW, PG, and CLX. I'm also monitoring WMT, PM, CVX, JNJ, and a few others.

In France, I will study SAN, DG, RAL, BN.

In Europe I will also study BMW, AZN, GSK.

Given the taxation of dividends, I am forced to stay away from the Swiss market...

Rather a fan of accumulation (Buffett's investment principle), I do not want to diversify too much, the 500,000 EUR will be spread over 15 lines at most.

[Jerome]

It's a great program and you'll build a nice portfolio.

SAN is my favorite FR value, BN I have been eyeing for some time, perhaps a future papable in the watch list of my portfolio

for the Swiss market, what if you went through NSRGY.PK for Nestlé or NVS for Novartis? does it make a difference?

[Lopazz]

THANKS

Otherwise, I have always been in the habit of buying shares on their original market... so I admit that I have not yet studied this possibility, I will do so when I have a little time (study of parallelism and liquidity)!

I'm also going to study Siemens, it's German and it looks tough to me!

[Jerome]

By the way, what difference does it make for you from a tax point of view between a Swiss, US or European dividend payer?

[Lopazz]

Clarification: I am a French tax resident.

On French dividends, your choice:

– either a flat-rate withholding tax of 21% (PFL option),
– either the classic income tax scale (IR option): (in tranches, according to income, maximum 41%, + possibly 3% of “exceptional contribution” to the crisis if you earn more than 250,000 EUR annually per share in your tax household), with a deduction of 40% to avoid double taxation with the corporate tax already paid by the company paying the dividend, and a deduction of 1,525 EUR for a single person (3,050 EUR for a couple),
– in both cases, the General Social Contribution on the entire dividend, currently at 13.5% and which increases to 15% at the start of the school year (deductible if “IR” option).

In the case of high incomes, it is better to submit to the flat-rate withholding tax. On the other hand, our new president is talking about eliminating the PFL option, precisely because it is profitable for high incomes, and reducing (or even eliminating) the 40% deduction; I will not comment on this subject.

In short, a gas factory, detailed here: http://www.netpme.fr/fiscalite-entreprise/1222-distributions-dividendes-fiscalite.html

For foreign dividends, there is a tax deducted at source, which varies depending on the country, and is offset (sometimes fully, sometimes partially) by a tax credit, if the country in question has signed a tax treaty with France.

Example :

The USA withholds 15% at source from foreign taxpayers, fully offset by an equivalent tax credit (18% on the net = 15% on the gross).

Switzerland does not go into detail and collects 35% from foreign taxpayers, partially offset by a net tax credit of 18%.

If you add income tax and CSG, unfortunately there isn't much left...

[birdienumnum]

Well done,

Finally someone who talks about dividend taxation. Whether on university benches, on specialized sites or in financial literature, taxation never seems to play an important role in investment decisions, yet it is an essential component as far as I am concerned.

To illustrate: I am a Swiss resident taxpayer. My American shares are subject to a withholding tax of 15% and an imputation of imputation of 15% (i.e. a total of 30%), which I can recover by declaring this income in my Swiss tax return. My Canadian securities are taxed only at 15%. Among my securities under the Master Limited Partnership (MLP) regime, such as KMP, the tax amounts to 35%, i.e. the same as Swiss securities. French securities were until recently taxed at 25% for the Swiss. This rate has just increased to 30%!!! It makes no difference if you own French stocks listed in the US (via ADRs) such as Sanofi, Total or France Telecom, the withholding tax will also be 25% and now 30%. On the other hand, ADRs of English stocks are tax free. So I enjoy 100% of the yield on my BP, DEO and GSK stocks. No idea if this would be the case if I held English stocks directly, as I have no positions in England, but I imagine so.

For Swiss securities, it is true that the withholding tax of 35% (which is called anticipated tax in Switzerland) is very high. On the other hand, there are Swiss securities whose dividends are tax-free, if the distribution comes from reserves (agio). This year, I was able to enjoy tax-free dividends from ABB, ZURN, RIEN, SQN, SREN, KOM to name just a few examples. Many of these companies are not Swiss Blue Chips but SMEs that are very little known to the general public and are leaders or number 2 worldwide in their respective fields. Some of these securities have been massacred recently and are worth accumulating.

[Jerome]

Good point, I confirm that I also had the pleasant surprise of receiving the entire dividend from Emmi (EMMN), without withholding tax.

[Lopazz]

Thanks for this interesting info!

[birdienumnum]

Well, the end of the world is still not here...here comes the time for a "yield hunter" like me to pull the trigger (in the next few days).

In France I buy: RAL (debt reduction, huge dividend and unanimously positive analysts), FP (massacre! the gas leak is already sealed…dividend soon to increase), SGO (US housing recovery play), DG (have you seen the price of their parking?!)

In the US I buy: JNJ (I have owned JNJ for over 6 years….a total disappointment in terms of the share price mainly due to investors abandoning the stock (many recalls in recent years). With a new CEO at the helm, a positive note from Goldman Sachs on a possible split of activities, a dividend increased year after year, I can easily see the stock going to USD 67 in the next 12 months), EMR, MCD (I'm still waiting a little), KMP (regardless of the price of a barrel, this pipeline company receives stable revenues, a bit like Vinci or Eiffage for highways. Dividend increases year after year. Warning: some Swiss brokers do not allow you to buy this MLP)

In Switzerland I buy: Inficon, Bossard (the entire float if I could!), ABB, Zurich (insurance not very popular at the moment), Rieter, Swissquote (speculative)

[Lopazz]

Nice selection; why not create a topic "birdienumnumnum's Portfolio"?

[Lopazz]

Good morning,

Exchange transaction of 20,000 EUR to USD today, and some purchases:

57 MCD at 88.71 $
70 CLX at 71.77 $
175 LOW at 28.288 $
55 KO at 75.27 $
46 WMT at 68.21 $
105 HRL at 30.01 $

… all without paying brokerage fees, thanks to the promotion at Binck.

I wanted to join PG but with the announcement made today (increase in turnover between 2 and 4%, increase in profit between 5 and 9%) and given the already high Pay-out ratio (65%), I prefer to stay away for the moment.

[Jerome]

yes birdienumnum, why not create a topic for your wallet?

Lopazz, these are very nice purchases that you have made, you will make people envious. I have not bought any shares since January, (HRL precisely) because I have invested a lot in real estate and therefore no longer have enough cash to invest in dividend payers

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