Friday, 23 July 2010

When am I entitled to dividends?

Question
How long do you have to have held a share for to be entitled to receive the dividend?Answer
In theory it could be as little as a couple of days, but as the price you pay will almost certainly reflect the expected dividend it’s unlikely you’ll make a quick buck.

When a company announces its dividend it also announces an 'ex-dividend' date, typically a few months before the dividend is actually paid. Dividends are paid to whoever owns the shares on that date, so to be eligible for dividends you’ll need to buy a share at least one day before it goes ex-dividend. If you sell on or after the ex-dividend date you’ll still receive the dividend.

However, the share price normally falls by the dividend amount on the ex-dividend date as investors buying then won't receive the imminent dividend. So if you buy the day before a share goes ex-dividend then sell the next day, you’re unlikely to profit.

Read this Q and A at http://www.candidmoney.com/questions/question240.aspx

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