I bought some British Aerospace shares on 20 July via my bank and sold
some of them today just after the announcement of the results and of
the dividend payable. Am I entitled to this dividend on either all the
shares I bought or only on the ones I still have, or neither or both?
To expand - you suggest that you still own some shares. You will get the
dividend if you own the shares on the ex-dividend date.
Note that the dividend is paid based on the company share registry on
the record date which is usually a few days before the ex-dividend date.
Therefore it is possible to sell shares before the ex-dividend date but
still get the dividend. This dividend then has to be given to the person
who bought the shares. I'm not sure how this situation is normally
resolved - it may be that the share price when you sell is adjusted or
there may be some other protocol to get the dividend to the right
Interesting, but wrong, methinks....
The record date is normally two trading days *after* the ex-div date,
precisely so that trades conducted prior to the ex-div date reach the
registrar in time for him to record, and therefore subsequently pay the
upcoming dividend to, the new share owner.
Whereas trades conducted on or after the ex-div date will not be
recorded until after the record cut-off date for the upcoming dividend,
so the registrar subsequently pays it to the previous share owner. The
share is sold *without* the right to that dividend and, everything else
being equal, the share price on the first day of ex-div trading should
have fallen by the amount of the divi foregone.
This process sometime used to go wrong when trades before the ex-div
didn't actually get to the registrar in time, so he erroneously paid
the divi to the previous owner. The trader/broker then had to write a
grovelling letter to this lucky individual and ask for the dividend to
be returned, so it could then be paid to the righful (new) owner of the
share. At least, that's the kind of letter I used to get when I owned
paper share certificates.