5D·

🧠 Buy BYD - just because of the payout?

Hello everyone,

I currently have a limit order for 40 $1211 (-0,87%) -shares at €40 and am honestly wondering:

Is it worth getting in now - just because of the announced special distribution in June?

🔍 Background:

BYD is planning a generous distribution to shareholders on June 10, 2025. Anyone who is invested on the cut-off date will receive:

📦 8 bonus shares for every 10 shares → taxable
🎁 12 capitalization shares per 10 shares → not taxable
💶 Cash dividend of RMB 39.74 per 10 shares → not taxable

With 40 shares, this means for me

➕ 32 taxable bonus shares
➕ 48 tax-free capitalization shares
💵 approx. 21 € cash dividend

Sounds like a no-brainer at first, doesn't it?

⚠️ But don't forget to water it down!

Of course, this does not mean that I suddenly have more value in my portfolio. The share price will adjust proportionately after the distribution - i.e. it will be diluted. So: more shares, but less price per share. The net value remains the same for the time being - only the cash dividend remains a real gain.

💡 My thought:

I am interested in BYD in the long term (e-mobility, battery division, expansion). But I'm unsure whether it really makes sense to get in now or whether I'm just being triggered by the "special dividend". The share has recently performed strongly, and some analysts see it even higher (e.g. JPMorgan with a target price of €72), while others already see it as fairly valued.

❓Question for you:

What do you think:

Would you buy the share now because of the special dividend?
Or do you say: This is window dressing and in the long term something else counts?

I'm looking forward to your opinion - especially from those who may have had BYD in their portfolio for some time 🚗⚡

Greetings,

Don💸

( Picture stolen from @DiviMike )

18 Comentários

Ozzel@Ozzel

Sorry, but I don't quite understand your post.

1. you have already bought BYD - why not inform yourself beforehand instead of seeking confirmation afterwards?

2. the picture and the text obviously come from an open post with exactly the same information. Why not just comment there instead of rehashing everything?

My assessment of BYD and the current distribution:

BYD is planning a payout that is quite questionable in its design. There are:
- 8 bonus shares for every 10 shares held (taxable),
- 12 capitalization shares for every 10 shares held (not taxable, but price-dilutive),
- 39.74 RMB cash dividend per 10 shares (not taxable),
- but only for full denominations of 10 shares - anyone holding 23 shares, for example, will receive nothing.

The whole thing leads to dilution: you then have more shares, but at a lower price - the bottom line is that the value remains the same (apart from bonus shares and dividends). Sounds like a lot, but in reality it is hardly an advantage if you take into account the tax liability and the share price adjustment.

Conclusion: For me, there is no reason to buy BYD in blocks of 10 shares. If you are already invested, you can take it - but a new entry just because of this distribution is not worthwhile in my opinion. Too complicated, too little added value, too much show.

•

thedonofstocks@der_Don

@Ozzel Just to clarify: I have not yet bought the share, but - as stated in the article (first sentence) - have placed a limit order at €40. The idea behind this was deliberately to obtain feedback from the community in advance before a possible execution takes place.

As for the image: I was aware that it was already in circulation, which is why I transparently linked the original creator below the image. My aim was not to repeat content, but to specifically start a new discussion - in particular on the question: How sensible is it to get involved at the moment, just because of this distribution?

I agree with your assessment of the distribution in many respects - especially with regard to the dilution of the share price and the limited real added value. Nevertheless, I find the community exchange on such topics exciting, precisely because opinions on this often differ.

Thank you for your contribution to the discussion - that's exactly what the platform is for.

•

Ozzel@Ozzel

Oh yes, sorry, I had actually missed that, I thought you had bought final.

•

thedonofstocks@der_Don

@Ozzel All well and good, it can happen. Nevertheless, thank you for your assessment in the 2nd part of your Kommentars✌🏼

••

Ozzel@Ozzel

@der_Don gerne ☺️

••

Richard V.@rvogel

@Ozzel sorry, I have a small question about your post: won't the bonus shares also dilute the share price? You can now see in some places that BYD is doing a 3:1 quasisplit. This means that the tax liability of the bonus shares effectively leads to a realized loss, at least in the short term, or have I misunderstood something? You actually have to sell the shares before the cut-off date and buy them immediately afterwards in order to remain neutral.

••

Ozzel@Ozzel

@rvogelgood question - I've also looked into the subject more closely because the whole thing is rather opaque.

So yes, the capitalization shares (12 per 10) are effectively a stock split, not taxable, but of course dilutive.
The bonus shares (8 per 10), on the other hand, are taxable, although they also contribute to dilution. And that is precisely the problem:
You get more shares, but the share price falls accordingly - and tax is still due on a notional "gain". In effect, this can look like a loss in the short term, even though you have not realized anything.

I see it very similarly to you: the bottom line is that for many investors, this remains a zero-sum game or even a disadvantage - especially if the tax-free amount has already been used up.

Your idea of selling before the deadline and buying again afterwards is not so wrong from a tax perspective - it just involves timing and spread risks.

For me personally, it's all too contrived - no real dividend, no sustainable substance. I would therefore definitely not buy because of this distribution.

••

Pedro M.@serkeftin

@rvogel same question!

••

X Nguyen@ngoog

Difficult to say if you are not yet invested in BYD because nobody knows where the share price will be after the dilution. Will it stay at the same level as now in 1 month? Will the share price be diluted but at a higher level than now? That remains the big question, but what you can do is get into BYD now with 10 shares, take part in the action and top up at some point after the dilution when it has reached your desired price.

I think the price is now very attractive at around €43, considering that it is around 20% down from the ATH. That's why I topped up again today. In my opinion, the few euros difference in the share price over the long term of 5+ years will no longer play a major role.

•

thedonofstocks@der_Don

@ngoog good and above all healthy train of thought. I think the same way. In 5 years' time, I won't care whether I started at €40 or €43, even if people always say that the profit lies in the purchase.

•

Hendan@Hendan

If your aim is on the long term you already answered your question. For me it's about their competitive advantages over their competitors, their effort in the research and development of batteries and photovoltaic, their product portfolio and last but not least the fact they outsold Tesla in Europe in 2024

•

Mennes@WolfOfAllStreets

I also added a "small" position to my portfolio today ✊

Does anyone know how the taxable bonus shares are calculated? How is the tax deducted when I receive shares? 🤔

•

Mennes@WolfOfAllStreets

I still have one thought:

If you soberly calculate the BYD distribution, the issue of bonus and capitalization shares increases the number of shares in the portfolio, but the share price (presumably) decreases in the same proportion. In other words: the total value remains the same, there is no real added value.

The catch: tax must be paid immediately on the bonus shares, even though the share price falls at the same time. The cash dividend cannot offset this tax deduction. The bottom line is that the value of the portfolio after tax is lower than before, assuming that the share price adjusts proportionally.

Therefore, from an investor's point of view, it would actually be smarter (?) to sell before the distribution and buy back in afterwards - that way you save the tax burden on the bonus shares and come out better at the end of the day.

Of course, this only applies if the share price is actually diluted one-to-one - but from a purely mathematical point of view, the distribution on the record date is not an advantage for existing shareholders, but rather a disadvantage.

Or am I seeing something wrong?

•

Walther von der Vogelweide@WalthervonderVogelweide

@WolfOfAllStreets You've got that right.
And if BYD is in the portfolio on June 10, then in bites of 10, otherwise it will be even worse!

••

StocksBot@StocksBot

If you think that BYD will one day be as big as Toyota or VW in terms of international sales and the Chinese market consolidates, then maybe yes. Otherwise, I wouldn't buy a share just because of the share price or because of a dividend. After all, the share price is driven by the fundamental performance of the company.

••

financial_wizard_soahm@financial_wizard_soahm

Where was this promotion announced or where can I find anything about it on the Internet? Because unfortunately I can't find anything about the promotion except here.

••

X Nguyen@ngoog

@financial_wizard_soahm You can find the relevant documents on the official BYD website: https://www.bydglobal.com/sitesresources/common/tools/generic/web/viewer.html?file=%2Fsites%2FSatellite%2FBYD%20PDF%20Viewer%3Fblobcol%3Durldata%26blobheader%3Dapplication%252Fpdf%26blobkey%3Did%26blobtable%3DMungoBlobs%26blobwhere%3D1638928501491%26ssbinary%3Dtrue

•

financial_wizard_soahm@financial_wizard_soahm

@ngoog thank you dir✌🏻

••