Re: Dividend, Share Price. Is there a connection?
G'day finnsk,
You are correct.
If you have a buy contract note dated prior to the exdiv date, the earliest you can sell to capture the dividend, is on the open on exdiv day.
So this means you can buy on the close the day before exdiv day, & sell on the open on exdiv day & capture the dividend. I have done this many times.
However, when you do this, you must make sure that you do your own registering prior to record date, especially your tax file number, as the registry is entitled to deduct 48.5% withholding tax from your dividend payment if you don't supply it in time.
It can be tricky, but if you are doing this all the time you get a routine going. What I mean is that if you buy the day before exdiv date, record date is in 4 more business/settlement days, but T3 settlement does not take place for 3 business/settlement days, so there is really only 1 day to register. This is also why you should not leave it to your broker....they will just shrug their shoulders & say not enough time.......you don't need this hassle....you can claim it back at tax time, but you don't have the cash in the meantime.
Some registries allow you to do this online, & others have forms that can be downloaded that can be filled in & faxed back on the appropriate day.....don't post unless you have plenty of time to spare.
Cheers