Dividend Amount - Equity Derivatives Provision: Difference between revisions

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{{eqderivanat|10.1}}
{{eqderivanat|10.1}}
{{2002 ISDA Equity Derivatives Definitions Section 10.1 TOC}}
{{2002 ISDA Equity Derivatives Definitions Section 10.1 TOC}}
 
The difference betwixt? A {{eqderivprov|Dividend Amount}} is a {{eqderivprov|Dividend Amount}}, end of the day. What this is all to do with is  ''when'' a {{eqderivprov|Dividend Amount}} is deemed to occur, and therefore which {{eqderivprov|Dividend Period}} it falls in.  
The difference betwixt? A Dividend Amount is a Dividend Amount, end of the day. What this is all to do with is  ''when'' a {{eqderivprov|Dividend Amount}} is deemed to occur, and therefore which {{eqderivprov|Dividend Period}} it falls in.  
{{dividend timing}}
 
*'''''Paid'' versus ''declared''''': Firstly, there is “'''paid'''” (which features in {{eqderivprov|Paid Amount}}) versus “'''declared'''” (which features in {{eqderivprov|Ex Amount}} and {{eqderivprov|Record Amount}}). One ''pays'' a dividend days or weeks after one ''declares'' it: hence the [[arbitrage]] opportunities between those taking cash and those taking scrip. So a {{eqderivprov|Record Amount}} may fall in the {{eqderivprov|Dividend Period}} before a {{eqderivprov|Paid Amount}}. You have to choose which you want.  
*'''''Paid'' versus ''declared''''': Firstly, there is “'''paid'''” (which features in {{eqderivprov|Paid Amount}}) versus “'''declared'''” (which features in {{eqderivprov|Ex Amount}} and {{eqderivprov|Record Amount}}). One ''pays'' a dividend days or weeks after one ''declares'' it: hence the [[arbitrage]] opportunities between those taking cash and those taking scrip. So a {{eqderivprov|Record Amount}} may fall in the {{eqderivprov|Dividend Period}} before a {{eqderivprov|Paid Amount}}. You have to choose which you want.  
*'''Date ''declared'' versus date ''traded [[ex-dividend]]''''': A couple of days before a [[record date]] has been declared the {{eqderivprov|Share}} to which it relates will start trading “[[ex-dividend]]” on exchange (meaning a buyer will not get the dividend payment attaching to the share. Why a time ''before'' the record date? Because of the settlement time for an equity sale. The holder of record is the one holding the share — since it takes a couple of days to leave the seller’s account and hit yours, trading date on which that economic effect takes place has to anticipate the record date.
*'''Date ''declared'' versus date ''traded [[ex-dividend]]''''': A couple of days before a [[record date]] has been declared the {{eqderivprov|Share}} to which it relates will start trading “[[ex-dividend]]” on exchange (meaning a buyer will not get the dividend payment attaching to the share. Why a time ''before'' the record date? Because of the settlement time for an equity sale. The holder of record is the one holding the share — since it takes a couple of days to leave the seller’s account and hit yours, trading date on which that economic effect takes place has to anticipate the record date.
 
{{dividend timing}}
{{sa}}
{{sa}}
* {{eqderivprov|Dividend Payment Date}}.
* {{eqderivprov|Dividend Payment Date}}.

Revision as of 15:40, 18 September 2019

Template:Eqderivanat Section 10.1. Dividend Amount

10.1(a) Record Amount
10.1(b) Ex Amount
10.1(c) Paid Amount

The difference betwixt? A Dividend Amount is a Dividend Amount, end of the day. What this is all to do with is when a Dividend Amount is deemed to occur, and therefore which Dividend Period it falls in.

  • Paid versus declared: Firstly, there is “paid” (which features in Paid Amount) versus “declared” (which features in Ex Amount and Record Amount). One pays a dividend days or weeks after one declares it: hence the arbitrage opportunities between those taking cash and those taking scrip. So a Record Amount may fall in the Dividend Period before a Paid Amount. You have to choose which you want.
  • Date declared versus date traded ex-dividend: A couple of days before a record date has been declared the Share to which it relates will start trading “ex-dividend” on exchange (meaning a buyer will not get the dividend payment attaching to the share. Why a time before the record date? Because of the settlement time for an equity sale. The holder of record is the one holding the share — since it takes a couple of days to leave the seller’s account and hit yours, trading date on which that economic effect takes place has to anticipate the record date.

The timing of dividends

There are four crucial dates: in order, these are the “declaration date”, the “ex-dividend date”, the “record date”, and the “Dividend Payment Date”.

  • Declaration date: The declaration date (also called an announcement date is the date on which the issuer announces there will be a dividend. They usually happen quarterly, for those stocks which are regular dividend payers. This comes first. The dividend declaration will include the size of the dividend (the Dividend Amount), the ex-dividend date (being the last date on which, if you buy the stock, you get the dividend), and the Dividend Payment Date — the date on which a dividend is actually paid. Timings are likely to be (these are indicative — I just made them up okay):
  • Ex-dividend date actually keys off the record date, and is set based on stock exchange rules — usually a business day before the record date. If you buy a stock on or after its ex-dividend date, you won’t get the dividend because the trade won’t settle until after the ...
  • Record date, being the date you actually have to be on the register of shareholders to qualify for the dividend, which will be paid to whoever was the holder of record on the record date, whether or not they have subsequently sold the share, on the
  • Dividend payment date which may be as much as a month or more after the original dividend declaration date.

See also

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