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PTGI HOLDING, INC. Message Board

  • cwn600 cwn600 Aug 22, 2013 5:25 PM Flag

    How This Dividend Works

    The dividend is ultimately paid to whoever owns the stock as of the close of trading on 8-27, the payment date, which is the day before the ex-date of 8-28.

    Just as with any dividend, buy the shares before the ex-date, get the dividend; buy the shares on or after the ex-date, don't get the dividend. The ex-date is the 28th.

    As jmgrossman2001 pointed out, because of the size of this dividend relative to the stock price, it uses different rules than normal dividends. If you are not familiar with those different rules, it can be confusing, to say the least. From August 16th through August 27th, the stock will be trading with a due bill attached that obligates the seller to forward the dividend to the buyer. That means that if you are a shareholder of record on the 20th (the record date), and you sell your shares before the ex-date of the 28th, you will still be paid the dividend on the payment date of 8-27, but that dividend will be removed from your account on the due bill settlement date and forwarded to whoever owned the shares as of the close of trading on the 27th.

    If you buy the stock any time from August 16th through August 27th and hold until the close of trading on the 27th, you will not be paid the dividend on the 27th, but on the due bill settlement date, as it takes a few days to transfer the dividend from the accounts of those who were shareholders of record on 8-20 but sold before the ex-date of the 28th.

    Any other interpretation of the dividend rules applied in this case is nothing more than a misunderstanding.

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