Ex-dividend Share Price Movements

[buzzlightyear]

I have noticed that when shares go ex-dividend, that almost all fall in price. Is this a fair comment?

Buzz

 

[tech/a]

Yes normally around the figure of the expected dividend.

Rosella/Don has made trading Dividends an art form.
https://www.aussiestockforums.com/forums/showthread.php?t=454

There is an even longer thread on Reefcap.

 

[Warren Buffet II]

Buzz,

Rozella/Don thread is a great read and has many example of his daily trading moves.

Just to answer your question, Yes the share price normally drops the dividend value which consist of the "main" dividend + any franked divids associated.

Eg.

CBA XD today Paid 85.0 cents /share + Franked @ 30% (85*1.3) = 110.5 cents

Last share price before XD was 36.6
% Profit Divds = 85.0/36.6 = 2.32% after 30% tax
with franked divds = 110.5/36.6 = 3.02%

Now, today at the start of the session the price was around 35.5
why? 36.6 * (100 - 3.02 ) = 35.5

Regards,

WFII

 

[buzzlightyear]

Thanks for the links......

 

[rozella]

I have given up on what might happen on exdiv day.....there are a lot of outside forces that can affect the outcome. The DOW up or down, interest rate increases or decreases, oil, gold the $, elections, etc. If you trade this strategy every day through thick or thin, you just have to take each day as it comes.....something out of the ordinary is bound to happen most days.

I adjust my stoploss down by the dividend + franking credit as the worst scenario + a bit of commonsense (try to anyway), then adjust my trailing stoploss at the end of each day.

Normally when a profit is announced, if the dividend has increased, the profit has increased & there is a good outlook for the future, then the price usually jumps, no matter what the trend was prior. These are the stocks I trade the most, but since I have been posting my trades on forums, the market has been so good that almost every stock that declares a dividend has been a winner......so when the market slows or even starts to go backwards, more care has to be taken with selections. There has been indications already this reporting season that more care must be taken with selections.

As to exdiv day results, there seems to be no pattern.......what is great one season can be a "dog" the next. On google search engine there is a study as follows exdiv day behaviour interesting but....its 40 pages.

Yesterday
CBA traded exdiv with a div + fc of 121.43 & was down 130.0
RUP traded exdiv with a div + fc of 18.57 & was up 14.0
WES traded exdiv with a div + fc of 75.71 & was down 75.0

I sold CBA on Friday (the day before exdiv) because it has a habit of taking too long to return to its price prior exdiv, with capital tied up too long with interest marching on.....it may prove me wrong being up 27.0 today atm.

Today
CCL traded exdiv with a div + fc of 22.14 & atm is down 20.0
CXP traded exdiv with a div + fc of 11.43 & atm is stable (no up or dn)

rozella

 

[money tree]

crashy posted on this a while ago:

https://www.aussiestockforums.com/forums/showthread.php?t=482

 

[The Barbarian Investor]

If you were looking at purchasing any of the below stocks then...when is the best time beore the dividends or shortly after-as a rule ????

listed investment company Argo Investments, plumbing supplier Crane Group and bionic ear implant manufacturer Cochlear going ex-dividend on Monday 21 February.

On Tuesday 22 February image management company HPAL, newly floated miner Essa Australia and winemaker Southcorp (in the midst of its takeover joust with Foster's Group), all shed their dividend entitlements.

Wednesday 23 February is all about heavy industry - resources and building materials. Rio Tinto, WMC Resources and Boral all go ex-dividend.

Rounding out the week is Australian Stock Exchange and Woodside Petroleum going ex on Thursday 24 and Friday 25 February respectively.