Dividends & T+3 - simple query

[nikkothescorpio]

Hi,

I've been a good lil kid and read a bunch of the dividend threads but just wanted to get this right as I'm still not sure.

Now I know to receive the dividend for an equity you must be the holder of those shares at the CLOSE OF TRADING the DAY BEFORE its nominated ex-dividend date.

But what I am wondering is whether to be 'THE HOLDER' of those shares you have to have actually placed the transaction 3 days prior or so - as the whole process takes approx 3 days to complete the sale???

Reason I ask, is I bought a parcel of IAG shares through Comsec on 27th AUG - ex-dividend date for IAG was 30th AUG.

So I've a hunch that I WILL NOT receive the dividend for these shares?

So do you need to transact how long before the ex-dividend date to be safe?

Sorry for the lame question.......clarity on this simple matter would be great.

Thanks in advance

Nikko

 

[Judd]

Reason I ask, is I bought a parcel of IAG shares through Comsec on 27th AUG - ex-dividend date for IAG was 30th AUG.

So I've a hunch that I WILL NOT receive the dividend for these shares?

Your hunch is wrong. You bought the shares before the ex-dividend date so you are entitled to the dividend. If you bought the shares on 30/8 you would not be entitled to the dividend.

 

[nikkothescorpio]

Your hunch is wrong. You bought the shares before the ex-dividend date so you are entitled to the dividend. If you bought the shares on 30/8 you would not be entitled to the dividend.

Judd,

Oh well - happy to be wrong.

So you merely need to have bought the shares prior to COB the day PRIOR to the ex-dividend date to be eligable for the dividend?

So even though technically you haven't paid for them yet - that is settlement hasn't occured isn't a drama?

IF SO...I am happy ....some website said something to the contrary.

So technically.....and I know a few people are dividend strippers....but you could seel the shares as soon as the open of business on the ex-dividend day and the dividend would remain allocated to you?

Thanks again for tolerating such a newbie question....I am getting different info from different sources.

Cheers, Nick

 

[rozella]

....but you could seel the shares as soon as the open of business on the ex-dividend day and the dividend would remain allocated to you?

Yep, you can sell as early as the open & be entitled to the dividend.

The trick now is to make sure you have your TFN registered by close of the record date so that they won't deduct 48% withholding tax.

Record date for IAG is 5th September.

 

[nikkothescorpio]

Yep, you can sell as early as the open & be entitled to the dividend.

The trick now is to make sure you have your TFN registered by close of the record date so that they won't deduct 48% withholding tax.

Record date for IAG is 5th September.

Rozella,

Ah thats an interesting point - I guess you just have to do that direct via whoever the registry manager for them is eh? eg computershare, registry link etc?

Thanks for the reply - I am looking forward to looking over your website this weekend as it looks very interesting and keen to look into it more.

Cheers, Nick

 

[rozella]

Ah thats an interesting point - I guess you just have to do that direct via whoever the registry manager for them is eh? eg computershare, registry link etc?

Thats right Nick, if you are going to trade for dividends, then you should register online with the registries so that you can update your details online.

If you only need the registry on a casual basis, then you can download the forms & fax the details.

Also, do a simple spreadsheet so that you can keep track of where you are at with each stock.

 

[nizar]

but you could seel the shares as soon as the open of business on the ex-dividend day and the dividend would remain allocated to you?

Note that the stock is likely to gap down on the open by an amount similar to the dividend payment (for obvious reasons), so by selling on the open of the ex-div day, its pretty hard to make money.

Rozella would be able to tell you more about this.

 

[nikkothescorpio]

Thanks Rozella and Nizar, will be all over your website this weekend, cheers, Nikko

 

[xtanda]

One thing we need always to check when buying for dividend:
* whether it is fully frank or not
If it is fully franked, the company has paid the tax on the dividend
usually at 30%, so if your tax bracket is 30% no need to pay tax on the
dividend.

The problem with this franking credit you need to hold the share at least 45 days. Otherwise, the franking credit is useless. (You need to pay your tax bracket on the dividend)...

 

[alex3]

Thanks all,
I'm new to the forum and have learned lots from your posts on this topic.

I have just experienced the frustration of selling some shares for the first time and had expected Comsec to put the sale proceeds into my CDIA account not knowing that they put the proceeds into what they call an everyday account. also they claim the proceeds will clear t + 3 working days which is incorrect you cannot lay your hands on the funds until T + 4 if you want the cash in your hand. Further one doesn't know about the paltry default daily limits until you try to get funds out!

I guess the lesson learned is to 'walk through' all new software, brokers, charting et al without actually completing a transaction until one is clear about how it all works, limits, dates and implications.

 

[cutz]

alex,

I don't think comsec claim that the funds clear on T+3.

T+3 means the settlement date, settlement is the day the trade is settled not the day the funds appear in your account, you still need to allow the funds to move between banks, normally this occurs overnight after settlement day.

With your account you need to configure your profile so that the settlement account is the CDIA if that's your preference.