Dividend Dilema: Need Help Please

Discussion in 'Trading' started by Hoofhearted, Aug 8, 2012.

  1. Is there any time period when I can own a dividend paying stock, and NOT be eligible to receive a dividend at some point in the future?

    Jim Cramer explained to me that if I am to receive the next dividend payment, then I have to own the stock on what he calls "The must own date", which is one trading day before the "ex-date", and three trading days before the "record date".

    Simple enough- but what he doesn't explain is whether or not I will be eligible for the dividend payment AFTER the next, if I happened to have bought the stock on or after the ex-date.

    So, If I buy a stock on the ex-date- I know I will not receive the next dividend payment, BUT, Will I recieve the one after?

    He also says that if I own the stock on the "must own date"- even if it's only for an hour or a day- and then sell the stock, I will still be able to collect the next dividend pay-out.

    This sounds good to me, BUT- what I can't get my head wrapped around is:
    If (on the must own date)I buy, let's say just one share of XYZ, which has a 5% yeild, then sell it to my buddy Chris, on the same date- Will both Chris and I be able to collect a dividend?

    This would seem improbable to me, but according to what I think Jim Cramer, and other stock experts are telling me, it seems as if we would both be eligible. But what if my buddy Chris then sells that same stock to his buddy, Dave? It seems that if the same stock changed enough hands within the day, then more dividends would be paid out than the stock itself is worth.

    I've had many tremendous headaches trying to get my little pea sized brain to understand this concept.

    Could anyone here help me out with it? Thanks
  2. cramer. lol. if you buy it after ex the same rules apply. you must own it on the close of the market the day before the next ex date.

    if you own it for a whole dividend cycle but sell it the day before ex you recieve nothing. you have to own it when it trades ex.
  3. Ahh- Thanks Free!

    You're the first I've heard explain it that way. Cramer talks way too fast, so even if he said it, I probably didn't catch it.

    But what about the dilema with my buddy, Chris buying the stock- then selling it to Dave- all on the day before the ex-date...

    Will we all get paid?

    NM...I just read your edit...thanks
  4. no. the registered owner on the close gets the div.