Dividends explained: dates, yield, tax and what a payout really adds

A dividend is part of a company's profit paid to its shareholders, usually in cash and sometimes as extra shares. It feels like free money, but it isn't: on the day the share stops carrying the dividend, its price usually falls by about the same amount.

What matters is your total return: the price change plus the dividends, after tax and inflation. This guide shows how to read each part.

Where a dividend comes from

A company makes a profit. The board proposes how much of it to pay out, and the shareholders' general assembly approves it. The rest stays in the business to fund growth or repay debt.

Nothing obliges a company to pay. A dividend can be raised, cut or skipped from one year to the next. Egyptian listed companies announce these decisions as disclosures on the EGX website and on their own sites.

The four dates that decide who gets paid

Trades take time to settle, so the ex-dividend date comes before the record date. The Corporate Finance Institute puts the gap at up to three days. For an Egyptian share, read the company's EGX disclosure. It states the last day to own the share and still receive the dividend.

Worked example: the price drop on the ex-date

These numbers are an example. You own 1,000 shares at EGP 40, and the company pays EGP 2 a share.

Check: 38,000 + 1,900 = 39,900. The dividend moved EGP 2,000 from inside the share to your account, and tax took EGP 100. You only come out ahead if the business keeps earning and the price recovers over time.

Dividend yield and yield on cost

Dividend yield is the yearly dividend per share divided by today's price. In the example, EGP 2 ÷ EGP 40 = 5%.

Yield on cost divides the same dividend by the price you paid. Say you bought at EGP 20 years ago. Your yield on cost is EGP 2 ÷ EGP 20 = 10%.

Yield on cost is pleasant to look at, but it doesn't help you decide. Your money is worth EGP 40 a share today, and today it earns 5%. That is the figure to compare with a certificate or a fund.

Tax on Egyptian dividends

Egypt taxes dividends at source: the company or custodian withholds the tax before the cash reaches you.

PwC's tax summary (last reviewed 17 August 2026) gives these rates. Egypt's income tax law was amended again in July 2026, so check your dividend statement for the rate actually withheld.

Gains from selling listed shares are now exempt for residents, and trades pay a stamp duty instead. Our first share order guide explains that.

Bonus shares: more shares, same value

Some Egyptian companies pay part of a distribution as bonus shares: free new shares in proportion to what you own.

These numbers are an example. A company gives 1 new share for every 4 you hold. You had 1,000 shares at EGP 40, worth EGP 40,000. Now you have 1,250 shares, and the price adjusts to about EGP 32. Check: 1,250 × 32 = 40,000.

You own the same slice of the same company, cut into more pieces. Bonus shares keep the profit inside the business; they don't hand you cash.

Dividends and inflation

A dividend is paid in pounds, so inflation eats it too. Urban inflation was 13.9% in September 2026 (CAPMAS). A 5% yield on its own loses value in real terms. The share's price, and the dividend itself, must grow faster than prices for you to come out ahead.

For comparison, Banque Misr's three-year fixed certificate paid 17.75% a year as of 1 October 2026, with no risk to your capital. A share's appeal is that its profits and dividends can grow with prices over many years, while a fixed certificate's payment can't. That growth is not guaranteed.

Try it with your numbersSavings ComparisonSee how your savings compare with gold, USD, and EGX investments after inflation.

When a high yield is a warning sign

A yield is high when the dividend is big, or when the price has fallen. The second case is common, and it often comes before a cut.

These numbers are an example. A company earned EGP 2.50 a share and paid EGP 2: a payout ratio of 2 ÷ 2.50 = 80%. If its profit halves to EGP 1.25, keeping the EGP 2 dividend would mean paying out 160% of earnings. A cut becomes likely.

Our reading company results guide shows where to find earnings per share and debt.

Spending vs reinvesting dividends

Reinvesting means using each dividend to buy more shares, so next year's dividend is paid on more shares.

These numbers are an example: EGP 50,000 invested, a 6% yearly dividend, and a share price that stays flat for 10 years. After the 5% tax, you keep 5.7% a year.

Check: 50,000 × 0.057 × 10 = 28,500, and 50,000 × 1.057¹⁰ ≈ 87,040. Reinvesting adds about EGP 8,540 here, before stamp duty and fees on each purchase. Small reinvestments can cost more in fees, so some investors collect dividends and reinvest them a few times a year.

Most equity and index funds do this for you: they reinvest or distribute the dividends of the shares they hold.

Your plan

1. Look at total return, price change plus dividends, not the yield alone.
2. Use today's yield to compare options; keep yield on cost for tracking.
3. Read the company's EGX disclosure for the last day to own the share and the payment date.
4. Check the payout ratio and debt before trusting a high yield.
5. Compare after tax and inflation with a certificate or a fund in Savings Comparison.
6. Decide what you will do with dividends (spend or reinvest) and write it down.
7. Check each dividend statement for the gross amount, tax and net cash.

What to watch out for

• Buying just before the ex-date. The price drops by about the dividend, and you pay stamp duty and fees on the trade.
• High-yield lists. A yield made high by a falling price is a warning, not a bargain.
• One-off payouts. A big special dividend doesn't mean the next one will come.
• Ignoring inflation. A 5% yield with a flat price loses value when prices rise 13.9%.
• Tax changes. Egypt amended its tax laws in July 2026; check each dividend statement.