Author Topic: Newbie Dividend Question  (Read 3881 times)

Norwegian72

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Newbie Dividend Question
« on: February 28, 2015, 12:25:19 AM »
I have a substantial allocation of a single stock, which I want to reduce my position in. In May they are paying record high dividends so I will keep them until that time, it's not a very volatile stock and a big diversified company so I believe the risk is small to the best of my knowledge. It's not because they are paying record high dividends that I want to defer selling, but the gain from selling the stock now is less than the dividend payout.

Looking at past years' general meeting minutes, there is a statement that says the Group's shares will be listed on the stock exchange exclusive of dividends as from <insert date here>. My question is: is this a statement that just records the fact that you are no longer eligible for dividends for the previous year after that date? Looking at historical share prices for this stock for 2014, there is absolutely no movement in the stock price either just before or just after the dividend dates (dividends are about 3% of share price), should the stock price normally drop around this period?

Hope the question makes sense.

Best Regards

PEIslander

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Re: Newbie Dividend Question
« Reply #1 on: February 28, 2015, 08:24:32 AM »
What's the ticker for the stock? (It might be easier for people to answer your questions if we knew what stock it is. I can't think of any reason to be secretive).

innerscorecard

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Re: Newbie Dividend Question
« Reply #2 on: February 28, 2015, 08:31:08 AM »
When you say the gain from selling the stock, do you mean the difference between the price paid and the sale price (that is the current market price), or do you mean the total current market price?

Retired To Win

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Re: Newbie Dividend Question
« Reply #3 on: February 28, 2015, 12:06:06 PM »
With a LOT of stocks, the market price will drop by the amount of the dividend (and sometimes a lot more) on the dividend x-date.  So, especially since you say the upcoming dividend is record high, I would expect that scenario to play out for your stock.  However, you say that historically for this particular stock that does not happen.  Maybe that will hold true this time, too.  But in your shoes I would not bet my profit on it.

Faced with your situation, I would decide to either sell the stock just a couple of days before the x-date (when prices peak in such situations) and take the profit OR hold past the x-date to lock in the dividend (which you would) and then be prepared to either sell or hold depending on the stock's price action.

Good luck.

Norwegian72

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Re: Newbie Dividend Question
« Reply #4 on: February 28, 2015, 01:20:29 PM »
What's the ticker for the stock? (It might be easier for people to answer your questions if we knew what stock it is. I can't think of any reason to be secretive).

No secret, but it's on the Norwegian stock exchange so I thought it would be irrelevant, ticker is KOG

Dividend Youngster

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Re: Newbie Dividend Question
« Reply #5 on: February 28, 2015, 06:09:33 PM »
Typically a stock will drop in price after the dividend because the company is paying out cash that it had in its bank account and was worth that amount and is paying it to shareholders therefor technically reducing what the company is actually worth... i.e. reducing the stock price.

Norwegian72

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Re: Newbie Dividend Question
« Reply #6 on: March 01, 2015, 12:46:38 AM »
When you say the gain from selling the stock, do you mean the difference between the price paid and the sale price (that is the current market price), or do you mean the total current market price?

I mean the closing price/current price for that day, listed as "Last" in the downloaded spreadsheet

Norwegian72

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Re: Newbie Dividend Question
« Reply #7 on: March 01, 2015, 03:47:03 AM »
With a LOT of stocks, the market price will drop by the amount of the dividend (and sometimes a lot more) on the dividend x-date.  So, especially since you say the upcoming dividend is record high, I would expect that scenario to play out for your stock.  However, you say that historically for this particular stock that does not happen.  Maybe that will hold true this time, too.  But in your shoes I would not bet my profit on it.

Faced with your situation, I would decide to either sell the stock just a couple of days before the x-date (when prices peak in such situations) and take the profit OR hold past the x-date to lock in the dividend (which you would) and then be prepared to either sell or hold depending on the stock's price action.

Good luck.

This makes a lot of sense, thank you.

gaja

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Re: Newbie Dividend Question
« Reply #8 on: March 01, 2015, 04:03:13 AM »
What's the ticker for the stock? (It might be easier for people to answer your questions if we knew what stock it is. I can't think of any reason to be secretive).

No secret, but it's on the Norwegian stock exchange so I thought it would be irrelevant, ticker is KOG

A large portion of that stock is state owned, and they don't sell or buy based on dividends or timing. Also, Kongsberggruppen has been getting a lot of military contracts lately, so they are doing good.

I see the same non pattern as you, with regards to sale price and dividend payouts. If you compare to other largely state owned companies, like Statoil and Telenor, do you see the same lack of pattern there?

Norwegian72

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Re: Newbie Dividend Question
« Reply #9 on: March 01, 2015, 04:52:31 AM »
What's the ticker for the stock? (It might be easier for people to answer your questions if we knew what stock it is. I can't think of any reason to be secretive).

No secret, but it's on the Norwegian stock exchange so I thought it would be irrelevant, ticker is KOG

A large portion of that stock is state owned, and they don't sell or buy based on dividends or timing. Also, Kongsberggruppen has been getting a lot of military contracts lately, so they are doing good.

I see the same non pattern as you, with regards to sale price and dividend payouts. If you compare to other largely state owned companies, like Statoil and Telenor, do you see the same lack of pattern there?

I checked Statoil which had ex-dividend date on 15.May.2014 here the share price drops from 186 (14th) to 180 (15th), a month later it's at the same level again.