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  • FIRST POST
    • tintin_1929
    • By tintin_1929 9th May 18, 10:39 AM
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    tintin_1929
    Dividend Question - Ex Div Dates
    • #1
    • 9th May 18, 10:39 AM
    Dividend Question - Ex Div Dates 9th May 18 at 10:39 AM
    Hi All,


    I'm sorry if this is a stupid question but I've been reading everything I can to try and understand this!


    Right, I understand that in order to qualify for the dividend, you must hold shares prior to the ex-div date. What I don't understand is why you wouldn't just buy a week or so before the ex-div date and qualify for the dividend?


    I know I'm missing something hence the question.
Page 1
    • ColdIron
    • By ColdIron 9th May 18, 10:41 AM
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    ColdIron
    • #2
    • 9th May 18, 10:41 AM
    • #2
    • 9th May 18, 10:41 AM
    You can but after the ex date the price will drop so you have effectively bought the dividend
    • MonroeM
    • By MonroeM 9th May 18, 11:29 AM
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    MonroeM
    • #3
    • 9th May 18, 11:29 AM
    • #3
    • 9th May 18, 11:29 AM
    You can but after the ex date the price will drop so you have effectively bought the dividend
    Originally posted by ColdIron
    Is that always the case ColdIron? As an example, I'm pretty sure that Bankers share price has gone up slightly since the ex div date on 26 April.
    • ColdIron
    • By ColdIron 9th May 18, 11:38 AM
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    ColdIron
    • #4
    • 9th May 18, 11:38 AM
    • #4
    • 9th May 18, 11:38 AM
    Bankers goes up a lot, but it can be difficult to discern movements due to share price growth and distributions which can produce a net gain, don't forget Sterling has been dropping recently
    • MonroeM
    • By MonroeM 9th May 18, 11:52 AM
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    MonroeM
    • #5
    • 9th May 18, 11:52 AM
    • #5
    • 9th May 18, 11:52 AM
    Bankers goes up a lot, but it can be difficult to discern movements due to share price growth and distributions which can produce a net gain, don't forget Sterling has been dropping recently
    Originally posted by ColdIron
    I was thinking of buying a small holding in Blackrock Smaller Companies but the share price is very high, in fact nearly at its peak but UK smaller companies in general are doing well at the moment hence the high buy prices.
    • le loup
    • By le loup 9th May 18, 1:51 PM
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    le loup
    • #6
    • 9th May 18, 1:51 PM
    • #6
    • 9th May 18, 1:51 PM
    If, over time, share values increase, and they do, the price will, more often than not, be at a peak.
    • ArchBair
    • By ArchBair 9th May 18, 7:02 PM
    • 111 Posts
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    ArchBair
    • #7
    • 9th May 18, 7:02 PM
    • #7
    • 9th May 18, 7:02 PM
    I was thinking of buying a small holding in Blackrock Smaller Companies but the share price is very high, in fact nearly at its peak but UK smaller companies in general are doing well at the moment hence the high buy prices.
    Originally posted by MonroeM
    I hold Blackrock Smaller Companies and think it is one of the best IT's in its sector. It's done very well for me over the years and although the share price is at its peak if it's a long term holding you should be fine. They also have their ex div date on the 17th so if you do buy some shares, buy before then.
    • ColdIron
    • By ColdIron 9th May 18, 7:34 PM
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    ColdIron
    • #8
    • 9th May 18, 7:34 PM
    • #8
    • 9th May 18, 7:34 PM
    They also have their ex div date on the 17th so if you do buy some shares, buy before then.
    Originally posted by ArchBair
    Why do you suggest that? In what way would you benefit?
    • Sally57
    • By Sally57 9th May 18, 7:35 PM
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    Sally57
    • #9
    • 9th May 18, 7:35 PM
    • #9
    • 9th May 18, 7:35 PM
    You can but after the ex date the price will drop so you have effectively bought the dividend
    Originally posted by ColdIron
    You are right about this most of the time but there are always instances where an IT's share price can increase in value after the ex div date.
    • ArchBair
    • By ArchBair 9th May 18, 7:42 PM
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    ArchBair
    Why do you suggest that? In what way would you benefit?
    Originally posted by ColdIron
    Well if MonroeM did decide to buy some shares she may as well do it before the ex div date to gain some more shares through dividend reinvestment. Or is that not right?
    • k12479
    • By k12479 9th May 18, 7:44 PM
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    k12479
    ...there are always instances where an IT's share price can increase in value after the ex div date.
    Originally posted by Sally57
    But is such an increase attributable to the dividend in any way?
    • p00hsticks
    • By p00hsticks 9th May 18, 7:48 PM
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    p00hsticks
    Well if MonroeM did decide to buy some shares she may as well do it before the ex div date to gain some more shares through dividend reinvestment. Or is that not right?
    Originally posted by ArchBair
    Not really - as others have pointed out, the price of a share usually drops immediately after the ex-dividend date, so for a fixed amount of money you either buy them at the higher price and get less shares initially but then a dividend (in cash or extra shares), or buy after the ex-dividend date when you should be able to get more shares for your money.
    • ColdIron
    • By ColdIron 9th May 18, 7:56 PM
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    ColdIron
    Well if MonroeM did decide to buy some shares she may as well do it before the ex div date to gain some more shares through dividend reinvestment. Or is that not right?
    Originally posted by ArchBair
    Well as I say in post #2 you are paying a higher price per share so get fewer shares for your pound but will get the dividend (which you can reinvest). If you buy ex div you have no right to that dividend but can buy the shares at a price that no longer includes the dividend but have no dividend to reinvest. Six of one and half a dozen of the other
    • ColdIron
    • By ColdIron 9th May 18, 8:15 PM
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    ColdIron
    You are right about this most of the time but there are always instances where an IT's share price can increase in value after the ex div date.
    Originally posted by Sally57
    Indeed, as I alluded to in post #4. However it can be difficult to see the effect of distributions in isolation amongst other competing factors, sentiment, currency etc especially with lower yields. It's easier to see it with OEICs as you can directly compare Acc and Inc funds where these other factors are neutralised
    • le loup
    • By le loup 9th May 18, 8:16 PM
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    le loup
    There is so much misunderstanding about dividends and share price.

    If all things are equal - and they rarely are - a company's value on ex-div date is reduced by the amount of the dividend. It has declared a liability to the shareholders that was not there the day before. Therefor the balance sheet - the book worth of the company has less value than it did.

    It is pretty pointless to buy just before the ex-div date even if you are taking the income, you are effectively just getting your own money back. If you have invested for growth and you reinvest that dividend you are paying twice; once for the original purchase and again to reinvest the dividend.
    • MonroeM
    • By MonroeM 10th May 18, 9:02 AM
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    MonroeM
    Well as I say in post #2 you are paying a higher price per share so get fewer shares for your pound but will get the dividend (which you can reinvest). If you buy ex div you have no right to that dividend but can buy the shares at a price that no longer includes the dividend but have no dividend to reinvest. Six of one and half a dozen of the other
    Originally posted by ColdIron
    So in general terms if you buy ex div you usually can buy at a lower price - is there an optimum time to buy for instance is it on the actual ex div date or monitor the share price up to a week after the ex div date?
    • ColdIron
    • By ColdIron 10th May 18, 9:36 AM
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    ColdIron
    Not really. I suppose for funds you might avoid buying just before they go ex div so that you don't get most of the dividend returned as an equalisation payment that you have to do something with
    • MonroeM
    • By MonroeM 10th May 18, 9:48 AM
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    MonroeM
    Not really. I suppose for funds you might avoid buying just before they go ex div so that you don't get most of the dividend returned as an equalisation payment that you have to do something with
    Originally posted by ColdIron
    Thank you, so there is no real timing per se with shares/IT's as you said before its six of one and half a dozen of the other.
    • MPN
    • By MPN 10th May 18, 10:35 AM
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    MPN
    I was thinking of buying a small holding in Blackrock Smaller Companies but the share price is very high, in fact nearly at its peak but UK smaller companies in general are doing well at the moment hence the high buy prices.
    Originally posted by MonroeM
    I bought into Blackrock Smaller Companies (BRSC) on the 3 May at a price of 1423.00. Therefore, it will be interesting to see what the share price will be after the ex div date - lower or higher?

    As mentioned by other posters, it is usually lower but apart from general market dips BRSC seems to be only heading in one direction at the moment but as we all know that can easily change.
    • MPN
    • By MPN 17th May 18, 5:55 PM
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    • 109 Thanks
    MPN
    I bought into Blackrock Smaller Companies (BRSC) on the 3 May at a price of 1423.00. Therefore, it will be interesting to see what the share price will be after the ex div date - lower or higher?

    As mentioned by other posters, it is usually lower but apart from general market dips BRSC seems to be only heading in one direction at the moment but as we all know that can easily change.
    Originally posted by MPN
    So, as above I bought 10K of shares in BRSC on 3 May for 1423.00 prior to the ex div date and today on the ex div date it closed at 1485.00.

    So on this occasion if MonroeM waited for the share price to drop on ex div date then she would have had to pay more for the shares and not receive the 16.00p dividend.
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