The Lemon Fool

Apologies for a blindingly simple question but I just want to be 100% sure.

I have some Diageo shares. They have an ex-dividend date of 25/08/2022 (Payment date of 20/10/2022). If I sell some on, say, 26/08/2022 will I get the dividend associated with them (on 20/10/2022)?

Is it likely that the share price will drop (all other things being equal) by almost the same amount as the amount needed to offset that dividend? Or is not a nice straight line like that?

Thanks

Pete

Google search will give you a better in depth answer, but companies use the "record date" to decide who owns their shares and are entitled to dividends, this is not the same as "ex-dividend date". My experience is that the share price drops at ex-dividend date, but how much by is finger in the air job.

seagles wrote:My experience is that the share price drops at ex-dividend date, but how much by is finger in the air job.

it is rather vague
"To be eligible for the dividend, you must buy the stock at least two business days before the date of record and own it by the close one business day before the ex-date."

https://www.investopedia.com/articles/02/110802.asp

SciFi wrote:Apologies for a blindingly simple question but I just want to be 100% sure.

I have some Diageo shares. They have an ex-dividend date of 25/08/2022 (Payment date of 20/10/2022). If I sell some on, say, 26/08/2022 will I get the dividend associated with them (on 20/10/2022)?

Is it likely that the share price will drop (all other things being equal) by almost the same amount as the amount needed to offset that dividend? Or is not a nice straight line like that?

Thanks

Pete

Yes and Yes.

Am home now so can give a good link for your first part. I also found an easy to understand link for part 2.

Good luck.

SciFi wrote:I have some Diageo shares. They have an ex-dividend date of 25/08/2022 (Payment date of 20/10/2022). If I sell some on, say, 26/08/2022 will I get the dividend associated with them (on 20/10/2022)?

Yes.

SciFi wrote:Is it likely that the share price will drop (all other things being equal) by almost the same amount as the amount needed to offset that dividend? Or is not a nice straight line like that?

I'd work on the basis that the share price might drop by at least the dividend amount. It really is a guess. For example, Shell went ex-dividend today and the shareprice is up slightly. I've seen other cases where the shareprice has dropped more than the dividend amount.

SciFi wrote:Is it likely that the share price will drop (all other things being equal) by almost the same amount as the amount needed to offset that dividend? Or is not a nice straight line like that?

In theory if the share price is £1.10 with a 10p dividend the share price would drop to a pound
but as you said "all other things being equal" and that is very rarely the case

SciFi wrote:Apologies for a blindingly simple question but I just want to be 100% sure.

I have some Diageo shares. They have an ex-dividend date of 25/08/2022 (Payment date of 20/10/2022). If I sell some on, say, 26/08/2022 will I get the dividend associated with them (on 20/10/2022)?

Is it likely that the share price will drop (all other things being equal) by almost the same amount as the amount needed to offset that dividend? Or is not a nice straight line like that?

Thanks

Pete

Yes, you will get the dividend, and yes it is likely, but not certain, that the SP will fall a bit on or after the ex dividend date. Movements in the market and demand for the shares will also influence what the SP does.

Just a note ...there is always a possibility that a share can trade ex dividend and the dividend is not paid...


"1an a company suspend or cancel a dividend in the light of the coronavirus (COVID-19) pandemic?"


https://www.lexisnexis.co.uk/blog/covid ... -(covid-19)-pandemic

"the payment of an interim dividend is a decision of the directors and no debt due from the company to its shareholders is created at the time that decision is made, so an interim dividend can be cancelled at any time up to its payment. A shareholder’s right to an interim dividend does not arise until the dividend is actually paid."

(Edit..I've got no idea why the link doesn’t work..the article can be found on the Lexis Nexis website but there are probably other sources).

monabri wrote:(Edit..I've got no idea why the link doesn’t work..the article can be found on the Lexis Nexis website but there are probably other sources).

Link fixed
https://www.lexisnexis.co.uk/legal/guid ... 9-pandemic

monabri wrote: https://www.lexisnexis.co.uk/blog/covid ... -(covid-19)-pandemic
:
(Edit..I've got no idea why the link doesn’t work..the article can be found on the Lexis Nexis website but there are probably other sources).

When a link has less common non-alphanumerics in it* the board software may decide it ends before it actually does; in the above case it decided it was ended by the ")". The solution is to put such links inside [url][/url] tags by clicking the URL button above the edit window when composing the post.

So [url]https://www.lexisnexis.co.uk/blog/covid-19/can-a-company-suspend-or-cancel-a-dividend-in-the-light-of-the-coronavirus-(covid-19)-pandemic[/url]

entered in the post will result in

https://www.lexisnexis.co.uk/blog/covid-19/can-a-company-suspend-or-cancel-a-dividend-in-the-light-of-the-coronavirus-(covid-19)-pandemic

* actually it's more complicated than just "less common non-alphanumerics" as some such are allowed, but if in doubt just bung the link into [url][/url] tags anyway, or Preview to check if it's necessary.

pje16 wrote:Link fixed
https://www.lexisnexis.co.uk/legal/guid ... 9-pandemic

Different link (and requires registration to read the full article).

Cheers for the info everyone

Pete

Just one caution. Make sure you’re getting the dividend in cash and haven’t forgotten that you opted for a DRIP before selling just after an ex date. Otherwise you are left holding a tiny number of shares (which were your divi).

As people say above, the 'record date' is what determines who gets the dividend - the owner at the close of business on the record date. Normally, ex-dividend dates are shown as the working day before the record date, which makes sense on an exchange that takes 2 days to settle - ie if you make a bargain to buy on a Monday, you get ownership of the shares before the start of trading on Wednesday. So if the record date is Tuesday, the old owner held them just long enough to get the dividend, and thus you say the ex-dividend date, ie the first date when you can make a bargain and not transfer the right to the dividend, is the Monday.

However, people have found a few shares (ETFs) saying their ex-dividend date is the day after the record date - see viewtopic.php?f=88&t=35273 . No-one could explain that - any more efforts would be welcome.

Shares are either cum-dividend ( before the record date ) i.e. priced including the due dividend or ex-dividend ( after the record date ) i.e. excluding the last announced dividend. Often the share price falls by an amount equal to the dividend.