39b: dividend holder of record date

CFA Level I Corporate Finance
#1

Declaration: On August 25th, the company announces a dividend in a press release

Ex-dividend date: On September 15th, people who buy on this date or after not get dividends. An investor would have to buy on the 14th to get access.

Holder of Record date: Since settlement in the American stock market is T+3, 3+14th = September 17. On September 17th, all the records would have solidified.

Payment date: On September 30th, the company sends cash out to shareholders.

What happens if I bought the stock on September 14th, and sold it on September 16 (after ex-dividend, but before record date)? Would I still be entitled to the cash dividend?

#2

Yes, you would get the dividend.

You will be the holder of record on September 17 and September 18; the suck . . . um . . . investor to whom you sold the stock will be the holder of record beginning on September 19.

#3

Haha, well is he really a sucker if the new price is guaranteed to fall on the 14th?

I’m guessing that in real life, the market price of the stock will drop the afternoon of the 14th to reflect the loss of dividend value?

#4

Yup.

#5

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I thought to receive the dividend, one had to be a shareholder on or before the ex-dividend date?