Ex dividend

melbury

I am looking to buy some shares that go ex dividend on 16th May, so if I buy them on Monday (i.e. 14th May) would I receive the dividend?

Thanks.

MoneySaverLog

If you buy them before the ex-dividend date then yes.

chris_m

Just bear in mind that the share price will probably drop by the amount of the divvie once they go ex-div. Not a problem if you are planning on holding for the long-term but could be if you aren't.

jayship

Those in the know would not sell their shares 2 days before the divi date. Usually during the last week or so the divi is factored in the share price. However u may be lucky.

Ifts

melbury wrote: »

I am looking to buy some shares that go ex dividend on 16th May, so if I buy them on Monday (i.e. 14th May) would I receive the dividend?

Sainsbury (SBRY) by any chance?

Is it the date of the purchase or the settlement date that has to be before the ex-div date to make sure you receive that divi?

Here is an example of some shares I bought before now:

Order number : XXXXX
Type : Buy
Name : TESCO GBP0.05
Settlement date : 17-Feb-2012
Order date : 14-Feb-2012
Deal date : 14-Feb-2012
Price : 3.13588 GBP
Quantity : 10,088
Consideration : 31,634.76 GBP
Commission : 5.95 GBP
Other : 159.17 GBP
Net value : 31,799.88 GBP
Status : Executed

As you can see I placed the buy order on the 14-Feb and the settlement date was 17-Feb.
So just wondering if the settlement date has to be before the day that the shares go ex-div to be eligible to receive that divi.

Sorry - its explained better than I can here:

xylophone wrote: »

"A share is said to be trading with dividend when the payment of a dividend is due in the near future and investors who buy the share now will receive the dividend. Once the security goes ex-dividend buyers will not receive the dividend; it will go to the seller who held the shares immediately prior to their going ex-dividend.

When a dividend is paid, it is paid to holders who are on the register (the company's register of shareholders in the case of shares) on a particular date, called the record date. In order to be on the register of shareholders on the record date a buyer needs to purchase the shares early enough that the trade will be settled (i.e. the shares transferred to the buyer) by the record date.

When a share goes ex-dividend, the price will drop (other things being equal) by the amount of the dividend."

https://forums.moneysavingexpert.com/discussion/comment/53026873#Comment_53026873

Masomnia

The purchase must be before the ex-dividend date.

property.advert

jayship wrote: »

Those in the know would not sell their shares 2 days before the divi date. Usually during the last week or so the divi is factored in the share price. However u may be lucky.

Nothing to do with luck. Expectation of dividends is accrued in the share price at every stage rather than just in the weeks before the dividend is paid.

There may well be a movement in share price when the amount of the dividend is declared and there will be a movement when the stock moves from !!! dividend to ex dividend.

gadgetmind

jayship wrote: »

Those in the know would not sell their shares 2 days before the divi date.

Not really. While it makes little difference, it does let you balance income versus capital gains. Some people's tax situation means they prefer the income while others want to minimise income but are more than happy to have some additional capital gain.

Note that all this jiggery pokery only applies to equities as bonds (usually!) trade clean.

melbury

Ifts wrote: »

Sainsbury (SBRY) by any chance?

Is it the date of the purchase or the settlement date that has to be before the ex-div date to make sure you receive that divi?

Here is an example of some shares I bought before now:

Order number : XXXXX
Type : Buy
Name : TESCO GBP0.05
Settlement date : 17-Feb-2012
Order date : 14-Feb-2012
Deal date : 14-Feb-2012
Price : 3.13588 GBP
Quantity : 10,088
Consideration : 31,634.76 GBP
Commission : 5.95 GBP
Other : 159.17 GBP
Net value : 31,799.88 GBP
Status : Executed

As you can see I placed the buy order on the 14-Feb and the settlement date was 17-Feb.
So just wondering if the settlement date has to be before the day that the shares go ex-div to be eligible to receive that divi.

Sorry - its explained better than I can here:



https://forums.moneysavingexpert.com/discussion/comment/53026873#Comment_53026873

Yes, I have been looking at both Sainsbury and Morrison - both have the same ex dividend date.

Still a bit undecided as some experts seem to think that Sainsbury will not be able to carry on paying such good dividends in future for some reason - I don't really understand why.

Really want to buy a share that will pay a good dividend, so have narrowed it down to Sainsbury, Morrison and Vodafone.

Now thinking that Vodafone would be the best option.

Ifts

Here is The Share Centres view on the companies you are looking at (could not provide link as had to be signed in to view), it may be of some help to you or on the other hand confuse you even more!:

Sainsbury (J) (SBRY)

Our View

Under/over valued?
Sainsbury announced that net profit and basic earnings were down for the full year in its results in early May. Underlying earnings and underlying basic earnings were up. Income investors should have been pleased with a 6.6% increase in the dividend to 16.1p per share.
Given the fierceness of competition in the sector, Sainsbury has performed relatively well and has increased market share to 16.6% - its highest level in nearly 10 years. This is in part due to its strategy on price perception on branded groceries driven by its Brand Match incentive and Taste the Difference range, as well as some of Tesco’s customers choosing to shop elsewhere in recent times.
Sainsbury has also seen general merchandise and clothing grow faster than its food business. Investors should note Sainsbury does not have the presence Asda and Tesco have with regards to clothing, so sales growth could be quite high for some time in comparison to its competitors.
The supermarket has seen 20% growth in online operations over the period. Looking ahead, Sainsbury aims to reduce its additional space programme in favour of increasing its online presence - something we believe is key in the battle for market share.
Headline grabbing incentives, such as Gok Wan launching a debut womens wear collection in over 200 stores, with prices starting from £20 pounds had a positive impact on foot fall in 2011. As well as the ‘buy Sainsbury’ range, launched in 2011, in an attempt to sell Sainsbury’s branded produce at 20% less than its branded equivalent. These types of operations which form part of Sainsbury’s strategy to retain and attract new customers and even promotion of more premium branded products has certainly dealt a blow to Tesco.
Sainsbury has no overseas diversification, therefore wholly reliant on the fortunes of the UK consumer. Concerns remain that the UK consumer could struggle in 2012 as austerity starts to impact the economy. However, profit margins may see some improvement as some raw commodities have started to experience price falls, which should lead to lower input costs.
We continue to recommend a solid Hold for now, as market conditions are challenging, but the business has a strong management track record. For income investors already holding the stock the dividend is well covered at present and they should continue to hold.

Risks
Strength of growth in the UK and the impact austerity may have on UK households between now and the end of 2012 is probably the single biggest factor that has the potential to squeeze Sainsbury’s profits. The UK continues to suffer high levels of unemployment, pay freezes and rising energy costs impacting on their discretionary spending, which may impact on more luxury food items and non-food products, which are considered discretionary.
Continued risks facing Sainsbury management is following the wrong business strategy and poor treasury, failure to understand its competition and customers, lack of diversification within its business model and the financial risks that would normally face any banking operations.

Comment updated 10 May 2012
Author: Sheridan Admans, Investment Research Manager

Morrison (Wm) (MRW)

Our View

Under/over valued?
The group owns and manufactures a large proportion of its food production. Not surprisingly it generates lots of cash and has little debt (£817m), and also owns most of its stores.
Although the company has been increasing market share recently it still struggles to do so against Tesco, which has also seen market share eroded by other competition. Competition in the sector is likely to remain an issue particularly as the UK consumer looks to make their pounds stretch further in these austere times.
Morrisons is dipping its toe into new areas that could be lucrative in the longer term. In its preliminary results it confirmed that it has set aside £1.2 billion for capital expenditure in 2012. Some of this capital will be used in the roll out of its fresh food store format, which Morrison believes is not easily replicated. The format is to include artisan butchers, bakers and fishmongers. Morrison is also intending to open convenience stores, and store openings that offer non-food products and services. We expect to see a management update on its strategy progression in its interim results in September.
In addition, to their capital expenditure programme, Morrison will be seeking to strengthen its online operations, which include the purchase of Kiddicare the online children’s goods retailer.
Although the sector does have defensive attractions (we all have to eat) with market conditions likely to remain nervy, given the impact of austerity in the UK and the current rate of unemployment it is likely to be a struggle. This has led to retailers in this sector aggressively competing on prices and the brand leader, Tesco announcing it circa £400 million investment in a pledge to revamp stores, improving fresh food operations and service.
Preliminary results were encouraging and slightly ahead of the market consensus, with sales up 7% and pretax profits before one off items up 8%. The Chief Executive in the statement also said that despite challenging trading conditions and competition, he believes Morrison is well positioned to deliver profitable growth in the year ahead.
We continue to recommend a Hold on Morrison for now. Morrison has a strong conservative approach to managing its business and over the long-term should reap rewards for shareholders. But it has been slow to move into online services and delivery.
As Morrison does not have an overseas strategy and is being subjected to fierce promotion competition in the UK where the impact of austerity has not been felt yet, it could prevent the share price from appreciating.
For income seekers the yield is reasonable and Morrison has demonstrated good dividend growth over the years with no obvious reason why we should not expect this to continue.

Risks
Strength of growth in the UK and the impact austerity may have on UK households between now and the end of 2012 is probably the single biggest factor that has the potential to squeeze Morrison’s profits. The UK continues to suffer high levels of unemployment, and pay freezes and rising energy costs impacting on consumer discretionary spending. This may impact on more luxury food items and non-food products, which are considered discretionary.

Comment updated 10 May 2012
Author: Sheridan Admans, Investment Research Manager

Vodafone (VOD)

Our View

Under/over valued?
Vodafone reported weaker revenues in Southern Europe, in its third quarter results on 9 February, led by tough trading in Spain and Italy, which saw sales fall by 3.1% to £7.24bn for the quarter. Weakness in the region was anticipated by analysts however this was offset in part by improvements in Northern Europe and further growth in emerging markets and US operations.
As we suspected increased smartphone penetration supported data revenue growth, increasing by 28.1%, and now represents 14.8% of the group’s revenue. We expect this to continue. Data revenue growth was also strong in its US associate business Verizon Wireless.
Mobile phone usage and data have proved fairly defensive in recent years. The thirst for data services is being driven by the advent of the smart phone and mobile tablets such as the iPad by Apple. It seems that mobile phones have become embedded in our everyday lives with people preferring to reduce budgets elsewhere than surrender their personal phone.
Vodafone has been streamlining its business, selling some of its non-core assets [which continued in the last quarter with the disposal of 24.4% interest in Polkomtel in Poland] using the proceeds to pay off debt and to continue its share buy back programme. The strategy has allowed Vodafone to concentrate on other areas such as America and India where they have a big presence. Verizon Wireless, Vodafone’s US business, in which it has a 45% stake, has also started paying a dividend
There is further streamlining to be done within the company and the next areas that analysts believe that sales will be made in are either Australia or New Zealand, with a further £3 billion possibly being raised.
Emerging markets continue to experience steady growth as do Vodafone’s data services, which now represent 14% of revenues and are a core part of its strategy. Vodafone also continues to seek new areas of potential growth for its business. It has recently launched a ‘charge to bill’ service that allows customers to charge purchases from online application stores to their mobile phone accounts initial results have been encouraging.
A strategic partnership with Asian mobile alliance Conexus, should increase Vodafone’s presence in Asia.
We are recommending a Buy on Vodafone for investors that want a business exhibiting defensive qualities, strong levels of free cash flow debt reduction plan, a concentration on its core growth opportunities while looking for the next growth prospect. The share price has underperformed this year, which suggests the potential for a modest rerating.
The group remains attractive to income seekers with a forecast dividend yield for 2013 of over 6%.

Risks
Pressure from European and UK regulators on pricing could become harder to resist over time. Mis-footing of Vodafone’s strategy, political factors, changes in taxation or becoming outdated by the advent of new technologies all have the potential of impacting Vodafone’s revenues.

Comment updated 28 March 2012
Author: Sheridan Admans, Investment Research Manager

melbury

Ifts wrote: »

Here is The Share Centres view on the companies you are looking at (could not provide link as had to be signed in to view), it may be of some help to you or on the other hand confuse you even more!:

Thank you so much for that really useful information.