Buying shares after dividend announcement?

If a company announces dividend, will I be eligible for the dividend if I buy shares of the company after the announcement of dividend?

Only if you buy the shares before the ex-dividend date.

Remember though, that the share price will drop the same amount as the dividend paid. Your only gain will be capital gain.

Your only advantage may be a tax advantage on the dividend.

Dividend is for the shareholders. Shareholder only would get it. If you buy shares after distribution of the divident, you do not deserve it, but after announcement, if the announcement includes the effective date, and if you are allotted the share before the effective date, you are eligible for the divident. Some companies do it to attract more shareholders - more common in mutual funds.

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http://buyingandsellingshares.blogspot.com/

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When a corporation announces a dividend it also announces a date of record and a payment date. The date of record is the date on which the company determines who owns the stock and is entitled to receive the dividend. Stock markets use the date of record to establish an ex-dividend date. This is the date on which the stock trades in the market without the dividend. The ex-dividend date is three days before the date of record, which is enough time for the company to adjust its records for stock that has changed owners in the market.

If you buy the stock before the ex-dividend date, you will be entitled to the dividend. If you buy the stock on the ex-dividend date or later, you will not get the dividend. However, on the ex-dividend date, the price of the stock will drop by the amount of the dividend that the previous shareholder will receive. This drop in price may not be apparent because many other forces affect the price of the stock in the market. but if the dividend is large and the stock price is fairly stable, the drop in price on the ex-dividend date can be observed.

Buying the stock before the ex-dividend date may be a good tax strategy. You will very quickly get dividend income from your investment, which is taxed at a lower rate than ordinary income. At the same time the cost basis of your stock will be a bit higher, so later when you sell the stock at a gain, your smaller capital gain will be subject to less tax.

The Announcement date does not count towards payment of Dividend. All that counts is the Ex-Dividend date of the stock.

You should buy te stock before the ex-dividend date, to receive the dividend amount.

Here you should understand what exactly is meant by ex-dividend date. On this particular day, the price of the stock will be adjusted by deducting the dividend amount from the last day's closing price of the stock.

So if you are playing for the dividend amount, then you should be vary of the fact that, under no external influence, the stock price will be reduced by the dividend amount.

For such announcements a record date is fixed in advance. You are eligible for the dividend, only if you hold such shares before the record date.

Generally, dividends are declared in the month of April onwards (after the completion of year end, 31st March of that particular year). So try to own shares of such companies in the months of January and February inorder to get the right of Dividend of that particular year.

While purchasing any share in secondary market you can verify the status of share, by asking whether it is including dividend or ex-dividend.

Consult your broker or financial advisor before owning any such shares.

Goodluck.

To determine whether you should get cash and most stock dividends, you need to look at two important dates. They are the "record date" or "date of record" and the "ex-dividend date" or "ex-date."

When a company declares a dividend, it sets a record date when you must be on the company's books as a shareholder to receive the dividend. Companies also use this date to determine who is sent proxy statements, financial reports, and other information.

Once the company sets the record date, the stock exchanges or the National Association of Securities Dealers, Inc. fix the ex-dividend date. The ex-dividend date is normally set for stocks two business days before the record date. 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.

Here is an example:

Declaration Date Ex-Dividend Date Record Date Payable Date
7/27/2004 8/6/2004 8/10/2004 9/10/2004

On July 27, 2004, Company XYZ declares a dividend payable on September 10, 2004 to its shareholders. XYZ also announces that shareholders of record on the company's books on or before August 10, 2004 are entitled to the dividend. The stock would then go ex-dividend two business days before the record date.

In this example, the record date falls on a Tuesday. Excluding weekends and holidays, the ex-dividend is set two business days before the record date or the opening of the market â€“ in this case on the preceding Friday. This means anyone who bought the stock on Friday or after would not get the dividend. At the same time, those who purchase before the ex-dividend date receive the dividend.

With a significant dividend, the price of a stock may move up by the dollar amount of the dividend as the ex-dividend date approaches and then fall by that amount after the ex-dividend date. A stock that has gone ex-dividend is marked with an "x" in newspapers on that day.

Sometimes a company pays a dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company or in a subsidiary being spun off. The procedures for stock dividends may be different from cash dividends. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date).

If you sell your stock before the ex-dividend date, you also are selling away your right to the stock dividend. Your sale includes an obligation to deliver any shares acquired as a result of the dividend to the buyer of your shares, since the seller will receive an I.O.U. or "due bill" from his or her broker for the additional shares. Thus, it is important to remember that the day you can sell your shares without being obligated to deliver the additional shares is not the first business day after the record date, but usually is the first business day after the stock dividend is paid.

U r suppose to have the shares of the repective company in ur DP on the record date. Thats it if u have the shares in ur DP on the record date then u r eligible for the divident. in other word u r suppose to buy the shares before the Ex date. that is the shares will be with u in ur dp by record dates.

is it ok, does it make scence

As long as you are invested before if goes ex-dividend

not if u buy them after the cut-off date.. usually the cut off date is before the announcement is made...

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