Investors Fees

Have you ever thought about how much investors have to pay to buy stocks?
I did a rough calculation after reading BVMF3 earnings release:

• Current dividends paid: with Fundamentus data, I multiplied current yield by market value to get all the dividends paid in 1 year.
• Costs with BM&f Bovespa was easily got in its earnings release.
• Brokerage commissions: here I had to make an assumption that one trade would cost, on average, BRL 15.00. That's because I can't get the total brokerage revenue, so I have to estimate it. Considering 83.9 millions of trades in spot market occurred in 2010, revenue would be 1.25 billions. I think that this amount is underestimated, because I'm not taking into account options, derivatives, term market, and so on.

With this premises, I can dare to say that investors received BRL 88.3 billions in dividends, but had to pay BRL 3.3 billions in fees (3.8%). That not seems to much.

But I think we have to discount dividends received by controllers, because they never trade its shares. Government will never trade its shares of Petrobras, for example. So we have to calculate total cost incurred by the market (float). So, for the first 10 biggest companies, I searched how many shares are in the market (float) and for the remaining I just assumed that controllers would have 30% of total shares. In so doing, total costs jumps to 6.6%  of income received (dividends).

It still not so high, but it's a significant cost. Over the years it makes a big difference. And the total costs is probably underestimated, because of brokerage costs and because I'm assuming that, for most companies, controller would have just 30% of its shares.

By the way, current yield (avrg for total market) is 4.5%, with or without considering PETR/VALE. So I think we're not at an expensive market at all, right now.