Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

I want to be a stockholder on record for a dividend. So lets assume I bought stock before the ex dividend date. Can I immediately sell the stock after the ex-dividend date to collect the dividend, or do I need to hold for a few weeks to collect the dividend?

Lets say the ex-dividend date is the 15th of the month. I buy stock on the 14th (I think this is soon enough to be a shareholder on record) and then I sell on the 15th. Do I get the dividend in my account when it is distributed?

Don't worry – I have a proprietary way of hedging the stock's post-dividend price adjustment, and it costs less than the actual dividend so all is well.

I just don't know what the shortest time I can hold a position is. I'd like to know the shortest theoretical time possible in order to get the dividend.

Insight appreciated.

share|improve this question
    
isn't it per stock, each company with its own rules? –  littleadv Jan 12 '12 at 5:30
1  
is it? I thought the announcements and the day of dividend distribution was each company's own rules, but the ex-div date is announced and then set in stone at the exchange. I imagine the length of holding period isn't an issue but that is exactly the question. –  CQM Jan 12 '12 at 5:33
8  
"I have a proprietary way of hedging the stock's post dividend price adjustment, and it costs less than the actual dividend so all is well." So you have a secret way to beat the system, but don't understand what ex-div really means? –  JoeTaxpayer Jan 12 '12 at 6:16
    
@JoeTaxpayer, thats correct, I've never held stock for its dividend, I usually only touch derivatives. I just didn't want all the responses to be about the price adjustment. All I can say is that it is a synthetic that you usually wouldn't do because you CANT make/lose money doing it, but in this case you don't want to make or lose money, just be on record for the dividend. –  CQM Jan 12 '12 at 15:20
    
Let us know when you make your first billion. No disrespect intended, if this were possible, it would already be out there. It's "common knowledge" that one can only get the dividend by owning it until ex-div at which point, it drops by an amount near the dividend. If in fact, you discovered something new, I wish you well. –  JoeTaxpayer Jan 12 '12 at 16:58

1 Answer 1

up vote 3 down vote accepted

You only have to own it for a day (or rather for some amount of time before the close of trading the day before the ex-dividend date). This is governed by exchange rules based on the date of record and payable date set by the company. You might want to look at this article or this one for more details.

It should be difficult to make money from changes due to the dividend distribution since it is well known and expected. The exchanges have established rules for handling the various details that can come up, and traders account for the change where appropriate (as in option pricing). Also, note that the favorable U.S. tax treatment of dividends requires a 60-day ownership period for the stock.

share|improve this answer
    
can you elaborate on the "some amount of time before close of trading day", I want the absolute theoretical minimum amount of time –  CQM Jan 12 '12 at 17:26
    
@CQM: I only meant that you have to take ownership before close of trading. I have no idea what happens for an after-hours trade, which is a trade outside of the exchange and not governed by its rules. –  mgkrebbs Jan 12 '12 at 19:59
    
@mgkrebbs - Australia has a similar tax treatment rule for dividends, it is over 45 day when annual dividends are $5000 or over. –  Victor Jul 31 at 6:14

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.