I have noticed from the charts that after the ex-dividend date or pay outs the stock usually declines two to five dollars per share within a few weeks. I have also noticed this with other high paying dividend stocks. What causes this and is this a norm and a good time to get in?
uan named one of best stocks to hold by this guy Paul Tracy
the ten “forever stocks” (some are funds, actually) from late last Summer were GOOG, BIP, PM, MA, AMJ, MKL, UTG, DEM, INTC and CPL, or at least, that’s the best list we could derive from their clues. For this year’s “best of 2012″ picks they’ve kept only BIP, UTG, INTC and maybe CPL from that “forever” list and added a few individual MLPs (OKS, UAN and MMP), an oil trust (SDT), another old tech stock (CSCO), and a foreign oil company (PBR). There’s a pretty overwhelming emphasis on pass-through yields and utility-like yields on this list, which is probably indicative of the nervousness that a lot of folks feel about the market — and, no doubt, of the growing need for yield among retirees … who are, you won’t be surprised to hear, the target customers of most investment newsletters.
Well its a very interesting subject to all as the replies to this question keep coming in. Do you mean the stock will decrease the day after exdividend date by the amount of the dividend payout for the quarter or the yearly dividend amount, because the last quarterly exdividend date and price declined from 25.5 down to 21.8 or close to that before it started back up in price. The quarter before that was 23.25 to about 20.25 before the price started going back up. In both cases it lookes like it took 3 weeks for the down turn before starting to climb. But it took almost two months before you got back to the same price as when the exdividend date was. Both of these is clearly a good time to get in is within three weeks after the exdividend dates. I'm buying more!
I'll confuse things even more. If you sell for "short settlement" on x-date or the day after, to settle before record date you won't get the dividend. That's why they put "record date" in there. Not many people do short settlement date trades, but they are available. Same thing for buying after X-date to settle before record date. No idea if you can do this on etrade or ameritrade or online trading, but the professionals can do it.
But think what happens on the morning of x-date. The price of the stock is reduced before trading begins by the amount of the dividend....which would really mess up a seller with short settlement.
to add to this, the dividends will just go into your account.
I myself dont play the buying and selling game around divy time. Its kind of pointless as once ex day rolls around the divy is taken off the pps anyway and it takes weeks to recoup the difference, An investor could get shut out of a nice pps gain by playing that game. for a while it drifted from 22 to 25. Im not sure if or when we see that pps again.
FYI: Any buy/sell transaction takes 3 bus.days to clear/record. That is always the difference between your exdate and record date! If you own at end of day on exdate, any sell after that date will go past the record date in order to clear/ record; meaning you are then on record on the record date for it and will recv!
Also, the stock price will always go down the amount of the div distribution-that is normal for all div stocks!
Hope this helps your decision making
So l3l_00lvl was/is absolutely correct
You can sell immediately following ex-date and will still receive the money. Essentially the price of the stock drops by the amount of the distribution on the ex date.....You as a shareholder are then on record to receive this distribution on the paydate
If you own the stock on exdividend day and sell two days later and are out of the stock. How do they get the dividends to you say if you are with etrade, ameritrade, scott etc. I thought there was a say 10 day difference between exdiv and the pay out. will they keep your account number and the brokerage firm put your dividends in that account number even though you no longer own that stock. That is what I am unclear about. Please explain if you anyone knows.
If you own a stock before the opening of the market on ex-dividend date, you will be the shareholder of record and thus entitled to the dividend.
If you sell on ex-dividend day, the new owner will be on record one day after the "record date" and thus ineligible for the dividend.