here is the question. a particular stock x-div date: 8/12/03 record date: 8/14/03 Pmt date: 10/1/03 Say I am short 1000 shares prior the x-date, and I close it before the record date, BUT after the X-date, will my account be debitted for the dividend at time of PMT? thanks a bunch. m.
I think the ex-div date and pmt date are the same. Anyway, as long as you are out of the stock before the record date, you are safe. I know the record date thing is accurate, but someone tighten me up on the rest please, if I am not accurate.
My thinking was along the lines of Inandlong, since I thought record date is the real deal, but blackguard says I will still be "the corporation" since I had the short position during the x-Date. What's the consensus? m.
If you're short overnight, coming into x date, you will be paying the dividend. "Transactons in stocks snall be ex dkvkdendor ex-rights on the second business day preceding record date fixed by the corporation or the dateof the closing of transfer books." PP2235 Rule 235, NYSE Constitution and Rules There are different rules for "cash payments" for stock. Don
ex-date for dividends is 2 business days prior to record date. The position needs to be closed 3 business days prior to record date, so the position will settle on the record date and you will avoid paying dividend. IMO
thanks Don. I guess attaching a little bit of $ to a mistake makes you learn quick. I only looked at the news release made buy the company, that indicated the record date w/o x-div. thanks. m.
This is how it works in your example. Let's say you shorted on 8/1/03. If you cover the position on 8/12/03 or 8/13/03 the price you are covering at has already been reduced the amount of the dividend, so really, you just got paid the dividend. Do you see? The price you covered at was reduced by the dividend amount. So since the trade won't settle for 3 business days from the trade date, in this case, it will settle after 8/14/03 so you will "be the corporation" and have to pay the dividend. But as I have established, you already earned the dividend since you covered at a price lowered by the amount of the dividend, which of course is beneficial since you are short. So really, you aren't "paying out" money or learning an expensive lesson. It is a wash, you already earned the money to pay the divident.
http://www.dripadvisor.com/dripinvesting/newsandviews/040403_1.asp I stand corrected. The above link makes it clear and provides a scenario similar to the opening post, except for a long not a short.