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Community


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Online Share Trading

Engage and learn about markets and trading online

Dividends

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ByronP
Contributor
Hi I am new to investing and not sure how Dividends work. I have read that you will be paid a dividend if you hold shares on the Date of Record. Are you able to buy shares the day before the Date of Record and still be paid the dividend, or is there a certain time period you would need to hold shares before you are paid the dividend? If you want to reinvest the dividend and buy shares with these is there a brokerage fee? Any info would be greatly appreciated. Byron
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8 REPLIES 8
SimonPB
Valued Contributor
You need to hold them at the close on the last day to trade (LDT). When you buy or sell is not important, just hold at close on LDT.
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theyoungster
Super Contributor
simon can you sell the next day and still collect the dividends, example: you buy at 16h49 on LTD and sell the next morning? on hope the share does not drop more than the dividend payout? ...
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ByronP
Contributor
Thanks Simon. Do people then buy the stocks close to the LTD to get the dividends and then sell soon after?
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john_1
Super Contributor
yes, but there are very few free lunches, the norm is for the market price to drop by a least as much as the div
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ByronP
Contributor
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ByronP
Contributor
Thanks Simon If you want to reinvest the dividend and buy shares with these is there a brokerage fee? Where are the dividends paid to, is it your trading account?
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KVW
Super Contributor
Just watch out, usually the share price drops by the amount the dividend pays. Eg: If a company declares 500Cents/Share and the price is 4500 at the LTD then the following day the share tends to drop 500Cents, in this case to 4000. This is a general rule of thumb and people have lost a lot of money due to this. Otherwise people would just buy and sell around LTD. Try buy at least a week or two weeks before the LTD sometimes around the LTD the share has increased more than what you would make out the dividend and you can pass them on at a better price. This is what I do and my average so far is about a 3,63% return a week before and a 4,1% 3 weeks before, obviously it depends on market condtions as well.
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louisg
Super Contributor
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