Income and purification
How do I deal with dividends in a halal portfolio?
How to handle dividend receipts, purification and record-keeping for a halal portfolio.
The short answer
Record each dividend, apply a chosen screening percentage to calculate any non-permissible portion, and donate that portion to charity as purification if required by your methodology. Keep clear records of calculations and donations.
Managing dividend income
Track dividend dates and amounts. Use vendor or fund-provided screening percentages where available. If a company’s non-permissible income portion is small, the corresponding purification amount will be small too.
Shariah-compliance considerations
Our platform uses AAOIFI Shari'ah Standard No. 21 as the practical benchmark for shares and related screening. Purification is a scholarly practice: consult a qualified scholar for personal rulings. Provider data dates and conventions can affect the percentage used for purification.
What this means in practice
- 1Keep records of dividend payments and the dates they were received.
- 2Apply the non-permissible income percentage to each dividend to calculate the purification amount.
- 3Donate the calculated amount to charity and keep receipts for your records.