Should I Wait for a Dividend Before I Sell My Shares? - Sell My Shares (2024)

FAQs

Should I Wait for a Dividend Before I Sell My Shares? - Sell My Shares? ›

It's a question we're frequently asked. The short answer for most people is “no”. In the short term, receiving a dividend comes at the expense of the capital value of your shareholding; shares fall by roughly the dividend amount on the Ex-Dividend Date (if you ignored all other market forces).

Key Takeaways

Shareholders who sell their stock before the ex-dividend date do not receive a dividend. The ex-dividend date is the first day of trading in which new shareholders don't have rights to the next dividend disbursem*nt. If shareholders continue to hold their stock, they may qualify for the next dividend.

To be eligible for the dividend, you must buy the stock no later than one day before the ex-date, which would mean two business days before the date of record. If you plan to sell your stock but wish to receive the dividend, don't sell it before the ex-dividend date.

Yes — Any sale that occurs on the ex-dividend date or later will exclude the pending dividend. You will still be the owner of record in the company books when they distribute the payment. So, if you sell a stock on the ex-dividend date, you will still get the dividend about two weeks later.

The ex-dividend date is the first day the stock trades without its dividend, thus ex-dividend. If you want to get the dividend payment, you need to own the stock by this day. That means you have to buy before the end of the day before the ex-dividend date to get the next dividend.

Still, if the stock or fund seems like it has stalled, then you might want to pocket the dividends. Of course, if the investment is no longer providing value—or if it stops paying a dividend—then it may be time to sell the shares and move on. You want to diversify.

Dividend capture can be an effective short-term trading strategy in certain markets, but it's not a plan to gain long-term wealth. Dividend harvesting can provide steady and reliable income without worrying too much about volatile market gyrations or confusing technical analysis.

With dividends, the stock price typically undergoes a single adjustment by the amount of the dividend. The stock price drops by the amount of the dividend on the ex-dividend date. Remember, the ex-dividend date is typically the same day as the record date.

A dividend chaser employs this strategy to try to profit from dividends. This strategy is executed by buying a stock just before the ex-dividend date, so that you will be a shareholder of record on the record date, and will receive the dividend.

What is the cut off date for dividends? ›

Record date, also known as the cut-off date, is the specific day on which a company finalises the list of shareholders eligible for its forthcoming dividend distribution. An organisation whose stocks are actively traded in the stock market expects to see a constant flux in the list of shareholders.

The method calls for buying a stock just before the ex-dividend date to receive the dividend and then selling it once it has been paid. The purpose of the two trades is to receive the dividend instead of investing for the longer term.

Cash dividends are paid out either as a check sent to the investor or as a credit to a brokerage account, which can then be reinvested. Stock dividends are paid in fractional shares.

The 45 day rule (sometimes called dividend stripping) requires shareholders to have held the shares 'at risk' for at least 45 days (plus the purchase day and sale day) in order to be eligible to claim franking credits in their tax returns.

Aim to hold your investments for at least five years, ideally longer. Historically, the stock market has tended to climb over time. So, while it's normal to worry when things look shaky, try to keep a long-term perspective. Remember why you invested in the first place.

After a stock goes ex-dividend, the share price typically drops by the amount of the dividend paid to reflect the fact that new shareholders are not entitled to that payment. Dividends paid out as stock instead of cash can dilute earnings, which can also have a negative impact on share prices in the short term.

The stock price drops by the amount of the dividend on the ex-dividend date. Remember, the ex-dividend date is typically the same day as the record date. If investors want to receive a stock's dividend, they have to buy shares of stock before the ex-dividend date.

If you buy stocks one day or more before their ex-dividend date, you will still get the dividend. That's when a stock is said to trade cum-dividend, or with dividend. If you buy on the ex-dividend date or later, you won't get the dividend.

What Happens If I Sell a Stock on the Record Date? You are still entitled to the dividend if you sell a stock on its record date. Since the ex-date has already passed, it's the seller, not the buyer, who's on the books as the shareholder on the record date.

Because dividend yield is a function of stock price, an alluringly high dividend yield can be a red flag. As the stock price goes down, dividend yield goes up, assuming the dividend payment holds constant.