Dividends and Total Return: How Investors Actually Make Money
How dividends work, how to calculate total return, and why costs and tax change the answer, with Ghanaian examples. Shares reward investors in two ways: the price can change, and the company can pay dividends. Understanding both, and what costs and tax take away, gives you a more honest picture of a return.
By Luther King · 17 October 2026
Two sources of return
Capital appreciation is a rise in the share price (it can be negative too). Dividends are cash payments to shareholders, decided by the company's directors within the company's legal and constitutional requirements.
How dividends work
Directors may recommend a final dividend for shareholders to approve, and may pay an interim dividend where permitted. An ordinary cash dividend can come from distributable profits, including retained earnings, so it need not be funded solely by that year's profit. The amount is usually quoted as dividend per share (DPS). Plenty of companies pay nothing in some years, preferring to reinvest.
A documented example. On 25 June 2026, shareholders at TotalEnergies Marketing Ghana PLC's 50th AGM approved a total dividend of GHS 3.2245 per share for the 2025 financial year. That total included an interim dividend already paid (GHS 0.8870 per share) and a final dividend approved at the meeting. When you see a dividend headline, check the financial year, the payment components and the entitlement dates. The total is not one payment you receive by buying today. This is a historical example, not a forecast.
Entitlement dates
To qualify for a dividend you must read the announcement's own ex-dividend, record (or qualifying) and payment dates. Do not assume that buying on the record date qualifies. Keep your payment details current with the issuer or registrar.
Yield and payout ratio
Dividend yield = annual dividend per share ÷ price per share × 100. A GHS 20 share paying GHS 1.00 a year has a gross yield of 5%.
Payout ratio = ordinary dividends ÷ earnings attributable to ordinary shareholders × 100. A 40% payout leaves 60% of accounting earnings undistributed. That does not mean the company is holding that amount in cash. A payout above 100%, or a loss year, needs careful interpretation.
A high yield is not automatically attractive. Ask whether earnings and cash flow cover the dividend, whether the company can still invest in growth, and whether it has kept paying through difficult years.
Total return
For a simple period with no extra contributions and no reinvested dividends, gross nominal total return is the price change (which may be negative) plus dividends received. Net return allows for costs and taxes. Real return adjusts for inflation, and a foreign-currency return also reflects exchange rates.
Hypothetical example: you buy at GHS 10.00, receive GHS 0.40 in dividends, and the price rises to GHS 11.20. If you still hold, the GHS 1.20 gain (12%) is unrealised. Add the dividend (4%) and the gross nominal return is 16%, before fees, tax and inflation: (11.20 − 10.00 + 0.40) ÷ 10.00 × 100.
Now add costs and tax
Buy 100 shares at GHS 10.00 and, for illustration, assume 2.5% all-in charges on both purchase and sale and 8% withholding on the dividend. The 2.5% is the top of the published ordinary range, not a typical broker's charge. Use your own contract notes.
Cash item | GHS |
|---|---|
Purchase value (100 × 10.00) | 1,000.00 |
Purchase charges at 2.5% | 25.00 |
Initial cash outlay | 1,025.00 |
Sale value at GHS 11.20 | 1,120.00 |
Sale charges at 2.5% | 28.00 |
Net sale proceeds | 1,092.00 |
Gross dividend (100 × 0.40) | 40.00 |
Withholding at 8% | 3.20 |
Net dividend | 36.80 |
Sale proceeds plus net dividend | 1,128.80 |
Net gain against outlay | 103.80 |
Net return = 103.80 ÷ 1,025.00 × 100 = 10.13%, against 16% gross. That is a one-year, no-reinvestment illustration that leaves out capital-gains tax, any home-country tax, inflation, currency conversion and other charges.
On tax: the Ghana Revenue Authority publishes an 8% dividend withholding rate, subject to exemptions and treaty treatment. Check the current position for gains on GSE-listed securities, because official summaries are not fully aligned. We therefore do not rely on any exemption here.
The short version: dividends are never guaranteed, and the number that matters is your return after costs and tax.
Next in the series: Part 9, Building Your First Portfolio.
This article is for education only. It is not personalised investment advice, and it is not financial, tax or legal advice. Investing involves risk, including the possible loss of money, and past performance does not guarantee future results. Rules, charges and data change, so confirm current details with the Ghana Stock Exchange, the Securities and Exchange Commission (Ghana), the Central Securities Depository (Ghana) and your own licensed broker before acting. GSE Monitor is a market-information and portfolio-tracking product, and buying or selling shares still requires an account with a licensed broker.
