Dividend distribution refers to the action of a listed company distributing cash to its shareholders, and special dividend distribution is a special form of dividend distribution. This article will explain the concepts of dividend/special dividend distribution, the impacts on stock price and shareholders' profits/losses on the ex-date, and the process time of dividend distribution.
1. Dividend distribution
- Participation requirements: If you hold the listed company's shares after the market closes on the day before the ex-date, you are eligible for dividend distribution.
- Process time: If you meet the dividend distribution requirements, Longbridge will process and credit the cash dividend to your account within 1 to 3 trading days after the payment date.
- Stock prices and shareholders' profits/losses on the ex-date: On the ex-date, the stock price of the listed company will drop, and shareholders will see a loss in their holdings before the market opens. However, this drop is offset by the cash dividend credited to shareholders' accounts, so the cost basis remains unchanged. In other words, after the dividend distribution, the shareholder's holdings change from consisting solely of the underlying security to consisting of the underlying security (now at a decreased price) plus a cash dividend equivalent to the decreased amount of the underlying security value.
2. Special dividend distribution
Special dividend distribution also refers to the action of a listed company distributing cash to its shareholders, but the reason for the dividend distribution is special. For example, a listed company might distribute special dividends because it has realized gains from certain investments rather than from its main operating business. Its participation requirements, process time, and impacts on stock prices and shareholders' profits/losses on the ex-date are consistent with those of ordinary dividends.
Disclosures
This article is for reference only and does not constitute any investment advice.
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Registered with the Monetary Authority of Singapore (MAS), Long Bridge Securities Pte. Ltd. is a Capital Markets Services Licence holder and Exempt Financial Adviser (Licence No. CMS101211).
A licensed corporation recognized by the SFC (CE No. BPX066). Holder of License Types 1 (Dealing in Securities), 2 (Dealing in Futures Contracts), 4 (Advising on Securities) and 9 (Asset Management). Also a registered HKEX participant and HKSCC participant.
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