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Learning, Sharing, and Teaching => Investor Alley => Topic started by: cbr shadow on January 24, 2013, 07:36:39 AM

Title: Dividend Timing
Post by: cbr shadow on January 24, 2013, 07:36:39 AM

A friend of mine asked me an investing question that I'm not able to answer, and googling an answer was more difficult than I thought it would be.
He bought some shares in a single company (SB) and is wondering if he's going to get a dividend for his shares on the date they list as the dividend payout date.  How long do you have to have the shares before that date to recieve a dividend?
His main question is:  If I purchase a bunch of shares the day before the payout, will I get a dividend?

Thanks

Title: Re: Dividend Timing
Post by: Jack on January 24, 2013, 07:42:26 AM

I don't know about the mechanics of the timing, but from what I've read it doesn't matter anyway because the dividend will be priced into the stock anyway. In other words, the value of the stock drops by an amount equal to the dividend when it's issued anyway, so the overall value of the investment is the same whether you buy immediately before or immediately after.

Title: Re: Dividend Timing
Post by: fiveoh on January 24, 2013, 07:46:07 AM

Quote from: cbr shadow on January 24, 2013, 07:36:39 AM

A friend of mine asked me an investing question that I'm not able to answer, and googling an answer was more difficult than I thought it would be.
He bought some shares in a single company (SB) and is wondering if he's going to get a dividend for his shares on the date they list as the dividend payout date.  How long do you have to have the shares before that date to recieve a dividend?
His main question is:  If I purchase a bunch of shares the day before the payout, will I get a dividend?

Thanks

You have to own the shares on the ex dividend date which is usually a few weeks or a month before the payout date.  So no he will probably not receive it if he buys the day before the payout date.

Title: Re: Dividend Timing
Post by: arebelspy on January 24, 2013, 08:47:56 AM

fiveoh (sounds like:
(http://25.media.tumblr.com/tumblr_lj10dorZUC1qz6xbzo1_500.png))
has it.

Google "ex dividend date"

http://en.wikipedia.org/wiki/Ex-dividend_date

Title: Re: Dividend Timing
Post by: nofool on January 24, 2013, 10:50:45 AM

Yup, what fiveoh said. I look up dividends on Bloomberg at work, but each company will generally have investor relations news on their site.

There are 3 different dates that are relevant to dividends:
1. Announcement/declaration date - when the company lets the public know that they'll be issuing a dividend
2. The ex-date - the date that determines who gets the dividend. all shareholders on ex-date receive the dividend. If you sell your shares after ex-date, you're still entitled to the dividend. If you sell the day before ex-date, you don't get the dividend. If your friend bought shares after ex-date, he doesn't receive the div, but the share price should be adjusted to account for it (should decrease by the amount of the dividend).
3. The payout date - the date when cash actually moves from the company to investors.

Title: Re: Dividend Timing
Post by: fiveoh on January 24, 2013, 11:32:15 AM

Quote from: arebelspy on January 24, 2013, 08:47:56 AM

fiveoh (sounds like:
(http://25.media.tumblr.com/tumblr_lj10dorZUC1qz6xbzo1_500.png))
has it.

Google "ex dividend date"

http://en.wikipedia.org/wiki/Ex-dividend_date

LOL thats the first time i've gotten that one.  Usually people ask if im a cop.