Dividend payments

jimmyss1

If I buy shares before an ex-dividend date but sell them before the record (or qualiying) date, am I still entitled to the next dividend payment?

I just want to know when is it safe to sell the shares without missing out on the dividends.

maxi_isa

If you sell after the XD date you receive the div.

jimmyss1

Yes, this is what I thought, but then what is the point of a record (or qualiying) date?

For example, as far as I'm aware the dividends are assigned to people based on the number of shares they own on the record date, which is a few days after ex-dividend date. So if I sold my shares before the record date, how will they know that I am entitled to the dividend if I am no longer the owner of the shares?

ffacoffipawb

jimmyss1 wrote: »

If I buy shares before an ex-dividend date but sell them before the record (or qualiying) date, am I still entitled to the next dividend payment?

I just want to know when is it safe to sell the shares without missing out on the dividends.

You do realise that the dividend isn't free don't you.

Example, a share costing 100p with a dividend due of 5p will fall to 95p when the share goes ex-div as the then purchaser won't get the dividend so the share ill be worth 5p less to him.

So
Before XD: Share costs 100p with a 5p dividend to come, so net cost is 95p.
After XD: Share is worth 95p with no dividend to come, net cost also 95p.

jimmyss1

ffacoffipawb wrote: »

You do realise that the dividend isn't free don't you.

Example, a share costing 100p with a dividend due of 5p will fall to 95p when the share goes ex-div as the then purchaser won't get the dividend so the share ill be worth 5p less to him.

So
Before XD: Share costs 100p with a 5p dividend to come, so net cost is 95p.
After XD: Share is worth 95p with no dividend to come, net cost also 95p.

Well, I was sort of aware that the share price drops on the ex-dividend date, but just wasn't sure whether it always does or by how much?

So, is the share price always garaunteed to drop by the dividend ratio on the ex-div date?

ffacoffipawb

jimmyss1 wrote: »

Well, I was sort of aware that the share price drops on the ex-dividend date, but just wasn't sure whether it always does or by how much?

So, is the share price always garaunteed to drop by the dividend ratio on the ex-div date?

All things being equal, the answer is generally yes, the share price will drop by the amount of the dividend because the purchaser will no longer be entitled to it, so the share is worth less to the then purchaser.

sabretoothtigger

In these crazy times you might be able to buy a share for less before ex-div then after but not often is other news more important then the div.
Hbos shares did this but obviously have fallen further since, etc



Here we can see Hbos going ex div on Sep 30th. However they had announced div would be paid in shares only which I guess seriously devalues them to any short term speculators


http://www.shareprice.co.uk/HBOS/HBOS-PLC


http://forums.moneysavingexpert.com/showpost.html?p=14583463&postcount=918