Since I decided to dedicate a portion of my stock investment into high yield dividend stock, I started to pay attention to EX DATE. In order to get the dividend payout for the quarter, I learn that I must buy the stock before EX date to be eligible to received dividend. Anyone buy on EX date or after will not get the dividend income. Right after EX date, I can sell the stock and I can still eligible to receive dividend. The interesting pattern I found is that the stock price will "automatically" reduced by the dividend payout amount on the opening of EX DATE, then the price will go back to normal after few days trading session. This could be an opportunity to buy the stock if your stategy is to ignore the dividend but betting purely the rise of the stock. One of my favoirte dividend payer stock FRO , which have a yield >15%, will have EX DATE tomorrow (10/10/07). The payout amount is impressive $3.25, or 6.25% assuming stock price $50 dollar. I bought this stock few days ago anticipating receiving this handsome amount of dividend. It'd be interesting to see how FRO trade tomorrow morning. My plan is to sell one or few days after ex date at the price I bought so I can receive the full amount dividend (6.25%) owning this stock just a week or two.
Wednesday, October 10, 2007
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4 comments:
I didn't know what "ex date" means show I googled it to find out
"The date on or after which a security is traded without a previously declared dividend or distribution. After the ex-date, a stock is said to trade ex-dividend.
This is the date on which the seller, and not the buyer, of a stock will be entitled to a recently announced dividend. The ex-date is usually two business days before the record date. It is indicated in newspaper listings with an x. "
It's quite interesting that you buy stock before ex date. But does it matter how long you have been holding the stock before ex date in order to qualify for the dividends?
I missed the date! I just read your entry today after work and i realized that it was too late already!
Today, as expected, the stock price drop about 3.25 from yesterday's close. It'not too late..Even you miss the dividend this quarter, this could be a buying opporunity.
Mangopudding, no it doesn't matter. You could buy 1 day right before ex date and you can still qualify for the dividend. You will receive the money on the payout date, which is usually 2 weeks after Ex-date.
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