Recently, several users have independently highlighted to me the issue of delisting dividends.
What are delisting dividends?
I am referring to dividends that are given when the stock is delisted, redeemed, or cancelled. These dividends usually have a dividend yield of ~100%. However, note that not all dividends with ~100% dividend yield are delisting dividends, for example:
8Telecom’s capital reduction dividends.
What about them?
Previously, StocksCafe simply listed all these delisting dividends and considers them as dividends. However, it was highlighted to me that this is not appropriate because it would skew the computation of P&L. For example: If I buy stock A for S$1 and receive S$1 as dividends as it gets delisted, I would have to set that I have sold it at S$0 to make it balance.
Although it balances out, if we look at “P&L + Div”, it will make “P&L” negative and “Dividends” overly optimistic …