Ex divident date question

[Nika]

I bought a stock in baby's ESA with the intent of getting the upcoming dividend.
I thought I had plenty of time to make it before the ex-dividend date since I had cash settled in the account.

But looking up my transaction history now, I see:

Trade date: 12/19/2012
Settlement date: 12/24/2012 (5 days, when you have cash sitting there already?)


Stock Ex-Dividend Date: 12/24/2012
Record Date 12/27/2012
Pay Date 1/28/2013
Declare Date 12/14/2012

With the settlement date being on the same day as an ex-dividend date, will I get paid this quarter?

P.S. It drives me crazy, but I can't correct the misspelling in the title.

[bjl584]

Ex-Dividend Dates

This may help.

From the article:

"If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend."

[Nika]

AAAAA!!!!!!!!!!!!!!!!!! Not what I wanted to hear.

Does this settlement period seem reasonable to you?

[Nika]

Googling, I saw someone posted that the trade date governs, not the settlement date.
Can anyone confirm?

[bjl584]

AAAAA!!!!!!!!!!!!!!!!!! Not what I wanted to hear.

Does this settlement period seem reasonable to you?

Settlement date seems right. You always have 5 days to come up with the money. Looks like you might have missed the dividend. But, if this is a long term stock buy, then you will receive it going forward.

[Nika]

Settlement date seems right. You always have 5 days to come up with the money. Looks like you might have missed the dividend. But, if this is a long term stock buy, then you will receive it going forward.

The money was already settled in the account. I did not have to "come up with it".

The dividend is 4%, so I am upset about it.

[bjl584]

The money was already settled in the account. I did not have to "come up with it".

The dividend is 4%, so I am upset about it.

It's 4% annually, so you only missed out on 1% of it.

What is the stock if you don't mind disclosing?

[Nika]

It's 4% annually, so you only missed out on 1% of it.

What is the stock if you don't mind disclosing?

No, it would be 4% payout now! (close to 16% annually)

AGNC

[bjl584]

No, it would be 4% payout now! (close to 16% annually)

AGNC

Ah, AGNC Reit. I looked into picking that up. My stepfather has owned it for several years. Dividend used to be close to 20% but was cut awhile back. Good play as long as interest rates stay at rock bottom.

Check out CHI. Convertable bond fund. Pays 9% monthly. Also a good play as long as interest rates remain low.

[Nika]

Check out CHI. Convertable bond fund. Pays 9% monthly. Also a good play as long as interest rates remain low.

I'm not that advanced don't understand this one.

[kv968]

I bought a stock in baby's ESA with the intent of getting the upcoming dividend.
I thought I had plenty of time to make it before the ex-dividend date since I had cash settled in the account.

But looking up my transaction history now, I see:

Trade date: 12/19/2012
Settlement date: 12/24/2012 (5 days, when you have cash sitting there already?)


Stock Ex-Dividend Date: 12/24/2012
Record Date 12/27/2012
Pay Date 1/28/2013
Declare Date 12/14/2012

With the settlement date being on the same day as an ex-dividend date, will I get paid this quarter?

P.S. It drives me crazy, but I can't correct the misspelling in the title.

You'll get the dividend since your settlement will be before the record date.

It took 5 days for settlement since all stock trades settle in 3 business days after the trade date. Since there was a weekend between the 19th and 24th, that's why it was 5 days until settlement.

[kv968]

Check out CHI. Convertable bond fund. Pays 9% monthly. Also a good play as long as interest rates remain low.

I'd keep an eye on that one. In 2011 27% of the yearly distribution was just return of capital and was 44% in 2012.

[jpg7n16]

Googling, I saw someone posted that the trade date governs, not the settlement date.
Can anyone confirm?

The technical answer is that the dividend is paid to the owner of record as of the record date. Settlement is the time between trade date, and when you show up as owner. For practical purposes, use the trade date vs the ex-date.

The ex-date is the 1st trade day where purchases will not qualify for the dividend. (hence the "ex")


The ex-date was 12/23, and you traded on 12/19, so you'd get the dividend. But why would you want to??

AAAAA!!!!!!!!!!!!!!!!!! Not what I wanted to hear.

Are you sure that's not what you wanted to hear?

Not sure if you're aware, but the stock price typically falls by the amount of the dividend at open on the ex-date. And dividends are taxable. And you haven't really held it long enough to qualify for the reduced dividend tax rate.


So you were hoping to buy something that would give you 4% of your own money back, on which you'd be taxed?? Are you sure you wanted to buy before the dividend??


If you don't believe me, then look at the trade history.

AGNC Historical Prices | American Capital Agency Corp. Stock - Yahoo! Finance

Closing price on the 21st: 31.15 (last trading day before ex-div)
Dividend: 1.25
Expected gap down on open: 31.15 - 1.25 = 29.90

Actual open on next trading day: 29.76


You bought it just in time to get taxed on your own money.

[thesimplemoneyblog]

Jpg said it correctly.

The trade date is what matters (not settlement), and if you purchase before the ex-dividend, you get the dividend. If you purchase on or after the ex-dividend you miss out on the dividend. However, the stock price adjusts downward on the ex-dividend rate, so in theory if you have $1000 in the investment with a $10 dividend, on ex-dividend date you would have $990 in stock value and a $10 dividend payment. As such, you are then stepping in front of a potential tax bill and your total value remains unchanged. Again, this is in theory as the price can adjust more (or less) than the dividend based on a number of other market factors. You're not 'beating the system' by getting in just before the ex-dividend day to collect a dividend.

[Nika]

You guys are right. However, if I add the expected dividend amount to my current stock position (as of today), I am ahead in actual dollars by 3%.

And I don't think it should be taxed -- it is in ESA, kind of like ROTH, from what I understand.