if you short a stock, who gets the dividend?
I the one that sells short owes the dividend amount to the one he borrowed it from, but who gets the actual dividend payment? Is it the one who shorted it? the one he shorted it to?
Merger partners D.Boerse, NYSE dangle a dividend (Reuters)
FRANKFURT/NEW YORK (Reuters) – Deutsche Boerse AG (DB1Gn.DE) and NYSE Euronext (NYX.N) unveiled a special dividend on Tuesday, flexing their financial muscle a month before shareholders decide whether to approve a merger that would create the world’s largest exchange operator.
Shareholders in a combined company are being offered a one-time dividend of 2 euros per share after the deal closes, the companies said in a joint statement. The total payout is about 620 million euros ($910 million).
The dividend, which had been discussed with shareholders in the last few months, was offered despite the fact that rivals Nasdaq OMX Group (NDAQ.O) and IntercontinentalExchange (ICE.N) dropped a competing offer for the New York Stock Exchange parent last month.
Now, the main hurdle for the two exchanges is winning antitrust approval for their $10.2 billion deal in Europe, where the combined company will have a lock on exchange-based derivatives trading.
“I’m not sure whether that dividend was necessary to get the shareholder approval at this stage of the game because you didn’t have a competing bid, and I think the risk is more on the competition (antitrust) side,” said Chris Allen, exchanges analyst at Evercore Partners.
Deutsche Boerse shareholders have until July 13 to tender their shares in the deal, and shareholders in the Big Board parent are set to vote on July 7.
Deutsche Boerse’s shareholders would control 60 percent of the new company. Deutsche Boerse Chief Executive Reto Francioni will assume the role of chairman while Duncan Niederauer, who is head of NYSE Euronext, will become chief executive.
“The ability to provide a special dividend underscores the strength of the combined group,” Niederauer said.
Earlier this year Francioni had brushed aside suggestions the company was poised to sweeten its offer.
“We have a signed merger agreement … which was fully negotiated over a long period of time,” Francioni told analysts at the time. “We stand by the terms of the agreement and we are working toward a timely closing.”
Yet the $11.3 billion bid from Nasdaq and ICE — thwarted by the U.S. Justice Department and then withdrawn — may have influenced the dividend decision. Reuters reported on April 13 that NYSE Euronext and Deutsche Boerse were weighing several options including paying a special dividend, to win shareholder support.
“Both companies have been returning capital to shareholders, and they thought they had a potential to do that given the combination,” said Allen. “This is something that has been telegraphed a bit over the last month.”
The news came after NYSE Euronext shares were halted, and sparked a brief 1 percent jump. The shares were off 2 cents at $35.48 in afternoon trading. Deutsche Boerse shares closed down 0.6 percent at 53.50 euros.
In a separate move announced on Tuesday, Deutsche Boerse said it had struck a deal with Switzerland’s SIX Group to take full control of derivatives arm Eurex, one of the main profit drivers at Deutsche Boerse.
(Reporting by Edward Taylor in Frankfurt and Jonathan Spicer in New York; editing by David Hulmes and Matthew Lewis)
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DiViDend QuestioN regarding short selling?
If I sell short a stock one day before the ex-dividend day, and then on the ex-dividend day I buy to cover the position; does the dividend get deducted from my account?
Dividend stocks: Can you short a stock and buy it at the same time?
I want to buy a stock that pays a dividend… what happens if you short this stock and it goes down, do you have to factor in the dividend?
If not could you short the stock as well as buy it to not only hedge the risk but have the chance of gaining on both moves?
Say the dividend yield is a solid 7%… If you bought 100 shares at $100 and shorted 100 as well, my thought is, if it goes down 5% I gain 2% overall from the stock purchase, and gain 5% from the short sell.
100 purchased: current value 10000 future value 9500+700dividend=10200
100 shorted: current value10000 future value 10500
Overall gain: 700 or 7%
In this case, I would not only hedge my risk, but profit from the dividend… In addition if it goes up and then begins to fall and I sell it, and then I buy it back after it falls I can make even more.
Is this possible? Is this smart?
I haven’t shorted before… If i would have 20,000 in available funds after buying 10000 worth and shorting 10,000 worth would I still have 20,000 available, or are the short sold stock value used up so you have he funds to buy back?
ok… what if it says you have to own a stock before say next monday in order to get a dividend, but they don’t pay out the dividend until a week later? Could you buy it the Friday before, and short it on Tuesday?
Cisco shares trade higher after report of dividend (Reuters)
NEW YORK (Reuters) – Shares in Cisco Systems Inc (CSCO.O) rose 3.2 percent to $21.94 on Tuesday after CNBC television said the company will start paying a dividend with a yield of between 1 and 2 percent beginning in 2011.
(Reporting by Edward Krudy; Editing by James Dalgleish)
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If prices of STOCK generally fall on the date of the ex-date of a dividend why don’t people just short sell?
That day? Since it falls the price of the dividend.
Wall Street gains on earnings and GE dividend (Reuters)
NEW YORK (Reuters) – General Electric (GE.N) delivered a shot of confidence to investors when it raised its dividend on Friday, pushing U.S. stocks higher and adding to optimism from another round of strong earnings.
The Dow Jones industrial average (.DJI) was up 102.32 points, or 0.99 percent, at 10,424.62. The Standard & Poor’s 500 Index (.SPX) was up 8.99 points, or 0.82 percent, at 1,102.66. The Nasdaq Composite Index (.IXIC) was up 23.58 points, or 1.05 percent, at 2,269.47.
(Reporting by Angela Moon, Editing by Kenneth Barry)
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What happens if you short sell a stock just before the dividend record date anticipating a drop in the price?
Are there complications with how the dividend is held in a short situation? Would I be responsible for those in one way or another and if so to who? (probably a broker)
Any insight or experience would be helpful. In particular I’m considering shorting a position of FRO as tomorrow they record the dividend.
Why are penny stocks bad?
Can anyone tell me why penny stocks are bad?
It seems to me that they are good value for money.
You pay little, and in most cases the dividend is quite good.
And another thing is, if they go down, they don t have a long way to travel, so u dont loose a lot or it stops and starts going back up. It cant go into the minus’s, can it?
Can someone explain to me the situation please. As i want to buy some shares in the very near future and dont know anything abt them.
thanks
