Ex-dividend

[posh]

When do you need to hold a share by to receive a dividend?

If today is the ex-dividend date, must I hold it by yesterday or 3 trading days ago (since registration takes place after settlement three days later)? What I mean is do you need to be on the company's books the day before the ex-dividend or merely hold those stocks (but have not yet been registered).

 

[posh]

Also, is it true that the stock price goes down by the amount of the dividend on the ex-dividend date? If so, is this a rule of thumb going by past records or is it actually made to happen manually?

 

[fimmwolf]

I believe it's 45 days prior to ex-dividend date.

http://www.ato.gov.au/individuals/content.asp?doc=/content/42807.htm&page=10

 

[cutz]

When do you need to hold a share by to receive a dividend?

If today is the ex-dividend date, must I hold it by yesterday or 3 trading days ago (since registration takes place after settlement three days later)? What I mean is do you need to be on the company's books the day before the ex-dividend or merely hold those stocks (but have not yet been registered).

You need to buy the stock the trading day before the stock goes ex div.

 

[cutz]

Also, is it true that the stock price goes down by the amount of the dividend on the ex-dividend date? If so, is this a rule of thumb going by past records or is it actually made to happen manually?

In general yes, because the stock has just lost its dividend.

 

[skyQuake]

To clarify:

You have to hold the stock for 45 business days with the div day occuring somewhere in there to get ur franking credits. (Ignore this rule if you're claiming <$5000 of franking credits this FY)

You gotta hold it the day before ex-div date. Buying it on the day is too late.

Stock losing its ex-div amount is mathematical, however in practise, a lot of the time, the share 'carries' its dividend in that it rallies to close the gap left by the ex-div. Much more pronounced during bull mkts than what we have now...

 

[fimmwolf]

ah, thanks skyQuake

 

[rozella]

The latest you can buy to be entitled to the dividend is in the closing matchout the business day before exdiv date.

Then the earliest you can sell to be still entitled to the dividend (provided that it was bought before exdiv date) is on the open matchout on exdiv day.

The important buy/sell dates for the dividend entitlement, is your buy/sell contract dates.....T3 settlement is irrelevant.

 

[deadset]

I'm not sure if I can sell on the 45th day (since purchase) and still claim the dividend, or do I have to wait for the 46th day before I can sell ?

 

[skyQuake]

the >45 day rule is only if you wish to claim the franked part of the divvies, and only if you are claiming more than $5000 of franking credits.
Those were the rules as of around 1yr ago, should be still the same by DYOR.

 

[posh]

yep, thanks all.

 

[dilbert]

The latest you can buy to be entitled to the dividend is in the closing matchout the business day before exdiv date.

Then the earliest you can sell to be still entitled to the dividend (provided that it was bought before exdiv date) is on the open matchout on exdiv day.

The important buy/sell dates for the dividend entitlement, is your buy/sell contract dates.....T3 settlement is irrelevant.

A few Q's:

1) what is meant by matchout?
2) I read somewhere that I still had to hold the stock on the record date (or at least the company hadn't adjusted their register if I had sold after the ex-div date)

eg:

1 Jan - Buy
2 Jan - ex Div date
4 Jan (T+3) buy settlement
10 Jan - Record date


Assuming franking credits <$5,000 would I still get the dividend if I sell on:
a) Jan 2 (sell on ex-Div date)
b) Jan 3 (T+3 (sell) is before Record date)
c) Jan 7 (T+3 (sell) is the Record date)
d) Jan 8 (T+3 (sell) is after Record date)