- History of consistent dividend payments for at least 3-5 consecutive years (like BVH, POW, REE)
- Reasonable dividend payout ratio (usually 40-60% of profits), neither too high nor too low
- Businesses with understandable, sustainable business models throughout economic cycles
- Healthy financial situation, low debt, abundant cash flow
- Operating in essential industries, less affected by recessions (power, water, telecommunications)
Pocket Option: What are stocks and dividends - Secrets to creating sustainable passive income for Vietnamese investors
Understanding stocks and dividends is the key to opening the door to financial freedom in the Vietnamese stock market. Instead of relying solely on monthly salary, this article will equip you with practical knowledge to build a stable passive income from Vietnam's most reputable companies, helping you stay steady even when markets fluctuate dramatically.
What are stocks and dividends: Basic concepts Vietnamese investors need to master
In the journey to conquer the financial market, understanding what stocks and dividends are is an essential foundation. Simple yet powerful, stocks are certificates confirming ownership of a portion of a company’s capital. When you own stocks, you’re not simply a customer but have become a real owner of that company.
Dividends – the “sweet fruit” for shareholders – are the portion of profits that companies share with those who accompany them. In Vietnam, dividends are usually paid in two main forms: cash (like a steady passive income flowing into your account) or stocks (helping increase the number of shares owned without additional capital).
Vietnamese stock map: Classification and unique characteristics
The Vietnamese stock market is like a diverse forest with many different types of stocks. Each type has its own characteristics and is suitable for different investment strategies. Understanding these differences helps you choose the right “land” to sow your investment seeds.
| Stock type | Key features | Risk level | Typical examples in Vietnam |
|---|---|---|---|
| Common stocks | Have voting rights, variable dividends | Medium – High | VNM (Vinamilk), FPT (FPT Corporation) |
| Preferred stocks | Priority in receiving dividends, usually no voting rights | Low – Medium | MSB (Maritime Bank), TCB (Techcombank) |
| Blue-chip stocks | Large companies, stable operations, high liquidity | Low – Medium | VIC (Vingroup), BID (BIDV), GAS (PV Gas) |
| Penny stocks | Price below 10,000 VND, highly volatile | Very high | HQC (Hoang Quan), HAG (Hoang Anh Gia Lai) |
Identifying golden dividend stocks in the Vietnamese market
Not all stocks pay attractive dividends. To identify what dividend stocks are and find those “golden egg-laying hens,” Vietnamese investors need to equip themselves with a “microscope” using the following criteria:
In the Vietnamese market, industries that typically offer attractive dividends include: power (POW, NT2), telecommunications (VNM, FPT), banking (VCB, CTG), and privatized state-owned enterprises like PVS, PVD.
The secret behind receiving and calculating dividends
Understanding what stocks are and what dividends are is just the first step. To become a smart investor, you need to master how dividends are calculated and the process of receiving dividends – things few people share about the Vietnamese market.
Dividend cycle: From decision to your account
The dividend process from when a company decides until it reaches you goes through 4 important milestones:
| Timeline | Explanation | Significance for investors | Real example |
|---|---|---|---|
| Declaration Date | Board of Directors announces dividend payment | Positive information, usually causes stock price to rise | VNM announces 1,500 VND/share dividend |
| Ex-dividend Date | First day the stock trades where buyers are not entitled to receive the dividend | Stock price usually drops by the dividend amount | Buying VNM after this date doesn’t qualify for this dividend |
| Record Date | Date that determines who owns the stock to receive dividends | Must own the stock before this date to receive dividends | Usually 1 business day after Ex-date |
| Payment Date | Date when the company actually pays dividends | Dividends are transferred to securities account | Usually 2-4 weeks after Record Date |
Experts at Pocket Option recommend: Don’t buy stocks just because dividends are coming. This is a short-term “dividend hunting” strategy that is usually ineffective because stock prices typically drop by the dividend amount on the ex-dividend date.
5 “unbeatable” dividend investment strategies for Vietnamese investors
After understanding what stocks and dividends are, you need to build an investment strategy suitable for your financial goals and risk appetite. Below are strategies that have been proven in the Vietnamese market:
| Strategy | Implementation method | Key advantages | Representative stocks in Vietnam |
|---|---|---|---|
| “Buy and sleep well” Strategy | Buy stocks of large, stable companies and hold for 5-10 years | Regular income, less need to monitor market fluctuations | VNM, GAS, POW, REE, FPT |
| Dividend reinvestment strategy | Use received dividends to buy more stocks (automatically or manually) | Leverage compound interest, long-term capital growth | MSN, VHM, HPG, TCB |
| “Dividend hunting dog” Strategy | Focus on stocks with high dividend yields (>6-7%) | Large passive cash flow, usually less price volatility | DGC, PC1, PPC, NT2, PMG |
| Dividend stream diversification strategy | Invest in multiple sectors with different dividend payment cycles | Year-round steady cash flow, reduced sector risk | Combination: VCB (banking), GAS (energy), GMD (ports) |
| “Dividend growth” Strategy | Select stocks with a history of steadily increasing dividends | Protection against inflation, increasing passive income over time | MWG, FPT, VNM, ACB |
The Pocket Option platform provides proprietary analytical tools that help Vietnamese investors determine the most suitable dividend strategy based on personal financial goals. From smart stock filters to portfolio simulations, we support you at every step of your investment journey.
Golden formula for analyzing quality dividend stocks
Not all dividend stocks are worth investing in. To find “diamonds” in the market, investors need to analyze thoroughly using core financial indicators. This is an essential part when learning about what dividend stocks are.
| Analysis indicator | Simple calculation method | Ideal levels in Vietnam | Real examples |
|---|---|---|---|
| Dividend Yield | (Dividend/share ÷ Stock price) × 100% | 5-7%: Good; >7%: Need to check sustainability | POW: 6.8%, NT2: 7.2% (2023) |
| Payout Ratio | (Total dividends ÷ Net profit) × 100% | 40-70%: Balanced; >80%: Caution | REE: 45%, MWG: 55% (2023) |
| Dividend Growth | [(Next year’s dividend ÷ Current year’s dividend) – 1] × 100% | >5%/year: Positive, exceeds inflation | FPT: 8.5%/year (past 5 years) |
| Dividend Coverage | EPS ÷ DPS (Earnings/Share ÷ Dividend/Share) | >1.5: Safe, sustainable | VNM: 1.8, HPG: 2.1 |
Besides quantitative indicators, smart investors must also evaluate qualitative factors such as:
- Company’s dividend payment culture (is there a tradition of maintaining or increasing dividends?)
- Quality of governance and financial transparency (are there irregularities in financial reports?)
- Competitive position and industry entry barriers (does it have monopolistic advantages or strong brands?)
- Long-term industry prospects (is the industry growing or declining?)
- Ability to adapt to new technologies and trends (is there investment in innovation?)
Pocket Option provides in-depth analytical tools for dividend indicators, helping Vietnamese investors quickly compare potential stocks and filter out “promising candidates” suitable for personal investment strategies.
Dividend traps Vietnamese investors should avoid
Dividend investing is not a risk-free path. In the Vietnamese market, there are many traps that even experienced investors sometimes fall into. Equip yourself with knowledge to recognize and avoid these risks.
| Trap | Warning signs | Prevention methods | Real examples in Vietnam |
|---|---|---|---|
| “High yield trap” | Stocks with abnormal dividend yields (>10%) | Check history, sustainability of cash flow and profits | Some real estate stocks that pay high but unsustainable dividends |
| “Sudden dividend cuts” | Businesses facing financial difficulties, profit declines | Diversify portfolio, monitor quarterly financial reports | Many steel companies cut dividends in 2022-2023 due to industry difficulties |
| “Cheap price illusion” | Stocks that drop sharply in price but maintain dividends | Analyze the cause of price drops, assess long-term prospects | Some small bank stocks during 2020-2021 |
| “Excessive payouts” | Payout ratio >90% of profits, company doesn’t retain enough capital for growth | Look for balanced payout ratios (40-70%) | Some SOEs after privatization to attract investors |
Financial experts at Pocket Option regularly update warnings about stocks at risk of dividend cuts, helping Vietnamese investors adjust their portfolios before the “storm” arrives. This is an exclusive advantage only available on our platform.
Market fluctuations 2024-2025: Dividend trends in Vietnam
The Vietnamese stock market is witnessing many important changes in the dividend policies of listed companies. Grasping this trend helps investors gain a longer view and make wise decisions.
- Wave of companies increasing cash dividend payout ratios (instead of stock dividends) to attract investors in a volatile market context
- Major banks like VCB, CTG, ACB have been granted relaxed regulations by the State Bank regarding dividend payout ratios, potentially increasing dividend levels in 2024-2025
- Export businesses such as seafood, textiles (MPC, TNG, GMC) expect improved dividends thanks to recovering orders
- Infrastructure and energy stock groups (POW, PC1, REE) maintain stable dividend policies thanks to cash flow from long-term projects
- Trend focusing on sustainability of dividend policies, not just high numbers
Pocket Option has built a proprietary dividend trend forecasting system based on big data and advanced AI models. This system analyzes hundreds of financial indicators, market fluctuations, and macroeconomic factors to predict potential dividend changes of listed companies in Vietnam.
Tax Guidelines and Legal Regulations on Dividends for Vietnamese Investors
When learning about what stocks are and what dividends are, investors cannot overlook tax and legal aspects. Understanding these regulations helps optimize investment efficiency and avoid unnecessary troubles with tax authorities.
| Tax/Legal aspect | Regulations in Vietnam | Special notes | Optimization strategy |
|---|---|---|---|
| Personal income tax on cash dividends | 5% on dividend value received | Withheld at source, investors don’t need to declare | Consider between cash dividends and stock dividends |
| Tax on stock dividends | No tax incurred when received, only calculated when selling shares | Need to keep information to calculate correct cost basis when selling | Effective tax deferral strategy for long-term investors |
| Information disclosure regulations | Company must announce at least 10 working days in advance | Monitor on HOSE, HNX and company websites | Use Pocket Option’s dividend calendar reminder tool |
| Shareholder rights to dividends | Right to receive dividends proportional to capital contribution, right to complain | Can complain if company doesn’t pay on time | Participate in AGM to protect shareholder rights |
The Pocket Option platform provides a smart dividend tax calculator, helping Vietnamese investors easily estimate taxes payable and actual profits from their investment portfolio. We also regularly update on changes in tax policies related to stock investments.
Conclusion: Building financial freedom from sustainable dividend streams
Understanding what stocks and dividends are is not just basic investment knowledge but also the key to building sustainable financial freedom in Vietnam. Dividends are the passive income stream that many successful investors have used to escape the “working for money” spiral.
The Vietnamese stock market, though still young compared to developed markets, has been and continues to provide many attractive opportunities for dividend investment strategies. With stable economic growth rates, many Vietnamese businesses are increasingly valuing sharing results with shareholders through sustainable dividend policies.
Remember that success in dividend investing doesn’t come from luck or short-term speculation. It requires patience, thorough research, and a clear strategy. By applying the principles and analytical methods shared in this article, you have equipped yourself with a solid foundation to build an effective dividend portfolio.
Pocket Option is proud to accompany Vietnamese investors on their journey to conquer the stock market. With an advanced technology platform, in-depth analytical tools, and a team of experienced experts, we are committed to delivering optimal investment solutions to help you achieve your personal financial goals.
FAQ
What are stocks and dividends?
Stocks are certificates confirming ownership of a portion of capital in a joint-stock company. When you own stocks, you become a shareholder and have the right to enjoy profits (dividends) and participate in voting on important company issues. Dividends are the portion of company profits distributed to shareholders, usually paid periodically in cash or additional shares.
How to choose good dividend stocks in Vietnam?
To choose good dividend stocks in Vietnam, look for businesses with: a stable dividend payment history for 3-5 consecutive years; attractive dividend yields (5-7%); reasonable payout ratios (40-70% of profits); strong cash flow and low debt; operations in essential industries such as power, telecommunications, and banking. Typical examples include POW, REE, FPT, VNM, and NT2.
Why do stock prices usually drop on the ex-dividend date?
Stock prices dropping on the ex-dividend date (ex-dividend date) is a normal and financially reasonable phenomenon. When a company pays dividends, this value is extracted from company assets and transferred to shareholders. Therefore, the stock price typically decreases by the amount of the dividend paid. This is not a real loss of value but rather a technical adjustment, and investors do not suffer losses because they have received the corresponding dividend.
Which strategy is suitable for beginning investors?
For beginning investors in Vietnam, the "Buy and hold" strategy for blue-chip stocks with stable dividend policies is the safest choice. Focus on 5-7 stocks from large, reputable companies like VNM, FPT, REE with good business history and stable dividend policies. Diversify across industries, maintain a long-term vision, and reinvest dividends to leverage the power of compound interest.
What tools does Pocket Option provide to support dividend stock investing?
Pocket Option provides a comprehensive ecosystem of tools for dividend investment strategies, including: smart stock filters based on multiple dividend criteria; real-time dividend payment calendars with automatic notifications; tools to track and analyze dividend payment history; AI-based dividend forecast models; investment portfolio simulations with dividend cash flow calculations; and in-depth analytical reports from Vietnam's leading financial experts.