Dividends and entitlements

[sleeper88]

hey guys, could someone clarify this question for me,

say for example, stock XYZ declared a dividend of 20c. The stock goes ex-div on the 6th of Jan. The record date is say 12 of Jan.

so here's the q, i know that if i purchased the shares before the 6th, (cum-div) and held it, i would receive the 20c dividend.
however what if i bought the shares before the 6th and sold it after the ex-div date but before the record date? say the 8th of jan..do i still receive the dividend?

does this also apply to entitlements eg rights issues etc?

 

[sails]

Re: Dividend and entitlements

The record date is usually inside the T+3 settlement from ex-div date. Eg. according to their website, CBA goes ex-div on the 19th Feb 2007 and the record date is 23rd Feb.

I have exercised ITM long calls (= buy shares) the day before ex-div day and exercised long puts (= sell the shares) on ex-div day and it always seems to work out OK.

Suggest you check with your broker if you are not sure.

Rozella may have more to add - he is the expert on dividends

 

[Staybaker]

If you are holding the stock when it does ex-dividend, then you are entitled to the dividend. You can sell it immediately if you like (that is, on the ex-dividend day) and still collect the dividend. The record date is, for all intents and purposes, irrelevant.

Cheers, Staybaker.

 

[reece55]

The only thing I would add here is the effect of Franking Credits.

If you are holding the stock in your own name and have less than $5000 franking credits in an income tax year, then you will be ok - you will benefit from the franking. But if you are holding the shares as trustee for a Super Fund or a Company, or have more than $5,000, then you must have held the shares at risk - or for 45 days, to be entitled to the franking credits.

Cheers

 

[rozella]

If you are holding the stock when it does ex-dividend, then you are entitled to the dividend. You can sell it immediately if you like (that is, on the ex-dividend day) and still collect the dividend. The record date is, for all intents and purposes, irrelevant.

Cheers, Staybaker.

Absolutely correct.

It is the date on the buy/sell contract that determines who is entitled to the dividend. You could buy on the close the day before exdiv day & sell on the open on exdiv day & be entitled to the dividend......I have done this many times.

 

[doctorj]

I take it this is the same for rights issues and the like as for dividends?

 

[rozella]

Yes, thats my understanding.