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I have a more or less formal question regarding dividends.
If a company pays an (annual) dividend of - say - 5%, this is voted for/against on the annual general meeting. Now, the dividend is paid out to all shareholders that own stock. The day after the annual general meeting, the shares of that company are traded "ex-dividend", meaning the assumed 5% lower. This all is clear to me and logical.
What I am uncertain about is when EXACTLY one has to own shares in order to be paid the dividend.
In other words: what happens if I buy - or sell - shares on the day of the annual general meeting?
Let's pick an example: SAP (Germany) have their annual general meeting today (15. May). Assume I own 1 share (approx 112€ right now). They'll pay a dividend of 1,50€ per share. So ex-dividend, the price per share will drop to 110,50€ (ignoring all other market factors).
Now, SAP's website states that "dividends are remitted without delay after the resolution on the appropriation of retained earnings, usually on the third business day after the Annual General Meeting. All shareholders possessing SAP certificates at the time of the resolution on the appropriation of retained earnings are entitled to receive payment of the dividend." https://www.sap.com/corporate/en/investors/stock/dividends-and-share-buyback.html
The German original of this section reads "Dividendenberechtigt sind alle Aktionäre, die bei Beschlussfassung der Hauptversammlung über die Gewinnverwendung SAP-Aktien besitzen.": https://www.sap.com/corporate/de/investors/stock/dividends-and-share-buyback.html Explicitly, if you own shares at the time the decision is made to pay a dividend, you are entitled to it. End of story.
So, to summarize:
- Date of resolution = annual general meeting = 15. May
- Date shares are traded ex dividend = 16. May
- Remission of dividends (payout day) = 15. May + approx. 3 days = 18. May
Does this technically mean you could buy SAP shares on May 15th, sell them in the evening the same day, hence are entitled to the dividend since you owned the shares "at the time of resolution of the appropriation", yet not suffer the ex dividend share prices.
Can't be, right?
So hence my question: How does this work - EXACTLY?