ex Dividend Date / when short to pay div.?

Discussion in 'Trading' started by saschabr, May 12, 2004.

  1. Hello fellow Traders,

    I am sure someone could easily answer
    the following question before I start to wade throu endless threads & pages:

    When, exactly down to the minute, do I have to be long / short a stock to be affected by a dividend payment ?

    Say in the following example, Spiders paid a quarterly dividend in March:

    cash dividends paid by SPY
    Effective Date: 19 Mar 04
    Record Date: 23 Mar 04
    Pay Date: 30 Apr 04

    I assume, that if you are long SPY by
    Friday, March,19, you are affected by the dividend payment. You will receive the payment even if you sell the following monday.

    But which time ?

    Market opening or closing ?

    I would guess closing time is effective for settlement procedures. Can someone please enlighten me ?
  2. You get (have to pay) the dividend if you purchase (sell short) the stock by the market close 3 days before the record date. Since stocks are usually reported as "ex-dividend", the magic date is the day before the stock trades ex-dividend.

    There was once a thread that questioned if purchasing the stock after the market close still gave you the dividend. I believe so - there would be a price discrepancy immediately at 4pm if not - but I can't say 100% for sure nor could anyone else in the thread.
  3. MR.NBBO


    Ex. Dividend date was 3/19/04.

    This means if your short or long BEFORE the 4pm close on 18th, you would pay....or receive the dividend.
  4. MR.NBBO


    "Ex. Dividend" means "trading without dividend". Hence it traded on the 19th with no dividend due to shareholders who bought it that day or later.
  5. 4pm is not the cutoff, I'm pretty certain of that. Any purchase the day before ex-div , any time of day, would get the div.
  6. Cheers to you guys for the input.

    As I understand, I googled around for quite some time as well, to be not affected by the div payment in the above example, it would suffice to close position on March 18, not neccessarily before 4pm and re-establish position on morning of March 19, maybe even in pre-market trading.

    To verify, I will look for the price discrepancy next time I know a stock I follow pays div, it should occurr over night.

    If anyone noticed something I just described is incorrect, pls post !