Can someone explain dividends to me?

Katgoddess

If today is the ex dividend date, when would I have needed to buy shares in order to receive dividends?

TIA

ETA Friday is the record date.

opinions4u

Before the ex-dividend date.

You won't qualify for the upcoming dividend (probably payable in 4-6 weeks), but you will get the one after (typically in 7 months).

Biggles

But missing the date is no big deal, as typically the share price drops on the xd date by approximately the value of the dividend.

Katgoddess

Thank you.

Generally speaking, does the price drop after the record date? As people who no longer want the shares but held out for dividends, sell?

CLAPTON

the price drops on the XD date

RayWolfe

Katgoddess wrote: »

Thank you.

Generally speaking, does the price drop after the record date? As people who no longer want the shares but held out for dividends, sell?

No they drop because the value of the company is reduced by the amount of dividend they have paid out.
.... that's very simplistic.

Biggles

So, if a company whose shares were priced at 100p has declared a dividend of 5p, on the date the shares go xd the price will - normally - drop to 95p, as buyers would then be getting the shares without that 5p benefit.

StevieJ

Biggles wrote: »

So, if a company whose shares were priced at 100p has declared a dividend of 5p, on the date the shares go xd the price will - normally - drop to 95p, as buyers would then be getting the shares without that 5p benefit.

Yes that is right, although other things can influence the share price on the day.
For example BP go xd on a particular day but the oil price shoots up 10 dollars, you almost certainly would not notice the drop.