Dividend query

[ceasar73]

How long a period does one need to own a stock before he/she is eligible for a dividend in that stock?

Surely an trader cannot buy a stock a week before dividends are paid and receive a dividend payment.

thanks.

ceasar.

 

[surfingman]

You can by the day before (maybe even on i not sure) the Ex date and still receive dividend.

Although keep one thing in mind that when the Dividend is Paid share price should drop by that amount.

EG $20 share
paid $1 Div

Now $19 in theory doesn't always happen but thats the text book approach.

 

[disarray]

when they release a statement of dividend payment they say it will be paid to people who hold shares at a certain date (before the ann was released). if you bought shares a day before that date then you are eligible.

 

[ceasar73]

Apologies. My original post should have read : How long a period does one need to own a stock before he/she is legible for a dividend in that stock?

However - im still confused b/c u guys are saying the opposite thing?

What am I missing here?

thanks

ceasar73.

 

[Glenhaven]

You can buy the day before the ex date and sell on the ex date and still get the dividend.

The one issue for a large trader is that they must hold for a certain period (not sure but around 60 days) to be eligible for the imputation credit. This only applies to investors with over $50,000 (this number also needs to be checked) in dividends per year.

 

[ceasar73]

You can buy the day before the ex date and sell on the ex date and still get the dividend.

The one issue for a large trader is that they must hold for a certain period (not sure but around 60 days) to be eligible for the imputation credit. This only applies to investors with over $50,000 (this number also needs to be checked) in dividends per year.

hard to beleive this - why doesnt everyone do this then. Buy before the ex date (less than 50k), sell shortly after (provided price has not gone down) and collect dividend?


thanks.


ceasar73

 

[Glenhaven]

Because as Surfingman said in an earlier post the share price theoretically falls by more than the dividend on the ex date because of imputation credit.

You can make money doing it but it doesn't always work. I have seen many cases where the share price falls by more than the dividend on the ex date. It really depends if you hit an up or down day.

 

[ceasar73]

http://www.news.com.au/business/story/0,23636,21827931-462,00.html

Have these two directors done this b/c today is ex date? or is it purely coincidental?

thanks

ceasar73

 

[rowes]

Hi,

goto http://www.asx.com.au/asx/markets/DividendSearchPage.jsp

enter your symbol and when it opens to the companies page with the dividend info click on the the table titles ie "Ex Div Date" or "Record Date" etc and it will give you a good description of what they all are and what they mean.

 

[Damuzzdu]

You can buy the day before the ex date and sell on the ex date and still get the dividend.

The one issue for a large trader is that they must hold for a certain period (not sure but around 60 days) to be eligible for the imputation credit. This only applies to investors with over $50,000 (this number also needs to be checked) in dividends per year.

Glenhaven,

Re the 60 days & $50K, not that is not correct.

The actual rules are:

The holding period rule requires you to hold shares ‘at risk’ for at least 45 days (90 days for preference shares) to be eligible for the franking tax offset.

All this means is that you must own shares for at least 45 days, or 90 days for preference shares (not counting the day of acquisition or disposal), before being entitled to any franking tax offset.

However, this rule does not apply if your total franking credit entitlement is below $5,000, which is roughly equivalent to receiving a fully franked dividend of $11,666 (based on the current tax rate of 30% for companies).


Trust this helps.
Cheers
John