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I’m holding stock in XYZ company and they are paying a dividend on April 3rd but the ex-dividend date is April 4th. In which of those two dates can I sell my stock and still receive the dividend?

Update

The dividend will be paid on April 3, 2023,to holders of ZIM ordinary shares as of March 24, 2023.

The ex-dividend date with respect to this dividend distribution will be April 4, 2023.

Shareholders who wish to receive the dividend must hold their ZIM shares until the ex-dividend date

Edit: Dividend info from the annual report

Phill Alexakis
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1 Answers1

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You will get the dividend if you hold the stock on the ex-div date, but it may not make a difference.

The value of a stock drops by the amount of the dividend, all else being equal, since it's "cash out the door" and reduces the value of the company, and hence it's stock. There's no "instant income" with dividends. You either sell for the pre-div price without the dividend or get the dividend and sell as the lower post-div price.

If the stock were selling for $100 and paid a $5 dividend, you could either sell the stock now for $100 or get the $5 dividend and sell for $95 (assuming no other moves due to market forces). There's not a way to get the higher pre-div price and get the dividend.

Taxes may make a difference depending on your holding period, tax bracket, and the classification of the dividend.

I was assuming that the ex-div date after the payment was bad information, but it's confirmed in their press release, and seems to be due to NYSE regulations:

Since the foregoing declared dividend amount per share constitutes more than 25% of the Company's ordinary share price on the declaration date (March 13, 2023), per the instructions of the NYSE, the ex-dividend date with respect to this dividend distribution will be April 4, 2023. Shareholders who wish to receive the dividend must hold their ZIM shares until the ex-dividend date.

I do not know the full reason for the late ex-div date; my guess is that they're trying to avoid any panic selling by shareholders seeing their stock drop by 25% suddenly before receiving their dividend.

So to answer your question, you must hold the stock until April 4th to get your dividend; if you sell before that, you will get the pre-div price and no dividend.

D Stanley
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  • That's interesting, but how is it possible to have the ex-dividend date on April 4th and the payout on April 3rd? Does that mean that anyone can buy the stock on the dividend date and receive the payment? – Phill Alexakis Mar 18 '23 at 16:23
  • Hmm. This seems to be a special case. I added a theory to my answer – D Stanley Mar 18 '23 at 16:29
  • Thank you, great explanation, I read the same part of the annual report but I got confused. So for me to get the dividend I need to hold until April 4th market's close is that correct?(Thus on April 5th to liquidate the position if needed) – Phill Alexakis Mar 18 '23 at 16:33
  • You could probably sell on April 4th since that's when the price will drop and you will have gotten your dividend. The bottom line is that you can either sell for the higher pre-div price or get the dividend, but not both. – D Stanley Mar 18 '23 at 17:14
  • Indeed it dipped by ~$5 (dividend was $6.4) , and at the end of the trading day dipped by ~$3.87. – Phill Alexakis Apr 04 '23 at 23:41
  • Interesting - so there was still some market movement upward after accounting for the dividend. Hopefully that's based in reality and not buying after a preceived dip. – D Stanley Apr 05 '23 at 14:29
  • yes and also at present it declined further more than the dividend price of $6, but I believe it's irrelevant to the dividend payment. – Phill Alexakis Apr 06 '23 at 13:40