From ex-dividend to distrubution where is my money?

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J G Bankerton
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From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Sat Jul 13, 2019 3:15 pm

I have Verizon stock in my 401k. It went ex-dividend July 9th but my money won't be distributed until August 1st. Where is the $2,494.390,000, not all mine, sitting for three weeks?

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Re: From ex-dividend to distrubution where is my money?

Post by tfb » Sat Jul 13, 2019 3:35 pm

J G Bankerton wrote:
Sat Jul 13, 2019 3:15 pm
I have Verizon stock in my 401k. It went ex-dividend July 9th but my money won't be distributed until August 1st. Where is the $2,494.390,000, not all mine, sitting for three weeks?
Verizon has it. They promised shareholders as of a certain date some money, to be distributed in the future. That's all. The date used to determine who will receive the money and the date they actually send the money don't have to be the same or next to each other.
Harry Sit, taking a break from the forums.

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Re: From ex-dividend to distrubution where is my money?

Post by FrankLUSMC » Sat Jul 13, 2019 4:56 pm

J G Bankerton wrote:
Sat Jul 13, 2019 3:15 pm
I have Verizon stock in my 401k. It went ex-dividend July 9th but my money won't be distributed until August 1st. Where is the $2,494.390,000, not all mine, sitting for three weeks?
In the Matrix
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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Sat Jul 13, 2019 7:55 pm

Two and a half billion dollars every quarter is a considerable sum even for Verizon. I assume Verizon gets a tax write off as I pay tax on the dividend. The stock price drops the amount of the dividend; I assume the worth of the company drops by the amount of the dividend is the reason.

Does Verizon keep dividend money in a money market until it is distributed? It seems Verizon has my money for three weeks. :?
Many reinvest the dividend, is there a way to arbitrage all the stock that will be bought on the 1st of August?

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Re: From ex-dividend to distrubution where is my money?

Post by alex_686 » Sat Jul 13, 2019 8:04 pm

J G Bankerton wrote:
Sat Jul 13, 2019 7:55 pm
Two and a half billion dollars every quarter is a considerable sum even for Verizon. I assume Verizon gets a tax write off as I pay tax on the dividend. The stock price drops the amount of the dividend; I assume the worth of the company drops by the amount of the dividend is the reason.
No - Why would they?
J G Bankerton wrote:
Sat Jul 13, 2019 7:55 pm
Does Verizon keep dividend money in a money market until it is distributed? It seems Verizon has my money for three weeks. :?
Maybe. More likely in treasuries - if they had the cash handy. You know that companies can pay dividends by issuing debt? And most companies will issue debt to cover a short fall in cash flow because having a steady dividend is very very important.
J G Bankerton wrote:
Sat Jul 13, 2019 7:55 pm
Many reinvest the dividend, is there a way to arbitrage all the stock that will be bought on the 1st of August?
Yes. It is called "chasing nickles down Wall Street before they disappear down the drain while dodging cars". Many hedge funds make a decent living doing this, and only a few blow up each year. It is thin margins with massive amounts of leverage in a tax advantage state allows funds to earn a decent yield above the risk fee rate.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Sun Jul 14, 2019 10:02 am

alex_686 wrote:
Sat Jul 13, 2019 8:04 pm
J G Bankerton wrote:
Sat Jul 13, 2019 7:55 pm
Two and a half billion dollars every quarter is a considerable sum even for Verizon. I assume Verizon gets a tax write off as I pay tax on the dividend. The stock price drops the amount of the dividend; I assume the worth of the company drops by the amount of the dividend is the reason.
No - Why would they?
You know that companies can pay dividends by issuing debt?
Because it lowers the income Verizon made, not unlike a REIT not paying tax on the distribution of income to the share holders.

Verizon is big on taking debt, not because they have to but because of creative bookkeeping; so they may borrow the money. Most of my stock is in a leveraged ESOP.

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Re: From ex-dividend to distrubution where is my money?

Post by alex_686 » Sun Jul 14, 2019 10:14 am

J G Bankerton wrote:
Sun Jul 14, 2019 10:02 am
Because it lowers the income Verizon made, not unlike a REIT not paying tax on the distribution of income to the share holders.
[/quote]

First, paying out a dividend does not lower a company's income. Earnings are on the income sheet, while dividends impact the balance sheet.

Second, REITs have to pay out their income in dividends. Reverse causality in not 100% here but it is close enough - with REITs, dividends come from earnings. This is not necessarily true for Verizion.

Third, I will point out corporate taxes are the rule, REITs are the exception to that rule. Kind of bedrock with taxation. Do you want to open up a philosophical and theoretical debate about the correct and proper role for taxes and how to levy them? That might be best for another thread. But be forewarned, the moderators like to shut such woolly topics down fast.

Last, I will point out that you kind of have this problem backwards. It is not so much that the stock falls after ex-div date by the amount of the dividend, but that the stock raises in price over the quarter in anticipation of that dividend being paid.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Sun Jul 14, 2019 11:12 am

alex_686 wrote:
Sun Jul 14, 2019 10:14 am
Do you want to open up a philosophical and theoretical debate about the correct and proper role for taxes and how to levy them? That might be best for another thread. But be forewarned, the moderators like to shut such woolly topics down fast.
My question is not philosophical or theoretical. I would like to know where my money is. If I sell stock on the ex-dividend date Verizon keeps some of my money for three weeks. It appears I have my answer.
FrankLUSMC wrote:
Sat Jul 13, 2019 4:56 pm
In the Matrix
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Re: From ex-dividend to distrubution where is my money?

Post by Yohanson » Sun Jul 14, 2019 11:37 am

On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Sun Jul 14, 2019 4:16 pm

Yohanson wrote:
Sun Jul 14, 2019 11:37 am
On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>
Vanguard pays in one or two days depending on if it is an ETF or the regular fund. Three weeks seems excessive to me but that seams the normal.

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Re: From ex-dividend to distrubution where is my money?

Post by jebmke » Sun Jul 14, 2019 4:19 pm

J G Bankerton wrote:
Sun Jul 14, 2019 4:16 pm
Yohanson wrote:
Sun Jul 14, 2019 11:37 am
On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>
Vanguard pays in one or two days depending on if it is an ETF or the regular fund. Three weeks seems excessive to me but that seams the normal.
Maybe you are looking at it wrong. Maybe it simply means that they have advanced their ex-div date by three weeks so you know sooner what the div is compared to a stock that only had a two day gap.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Sun Jul 14, 2019 5:12 pm

jebmke wrote:
Sun Jul 14, 2019 4:19 pm
J G Bankerton wrote:
Sun Jul 14, 2019 4:16 pm
Yohanson wrote:
Sun Jul 14, 2019 11:37 am
On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>
Vanguard pays in one or two days depending on if it is an ETF or the regular fund. Three weeks seems excessive to me but that seams the normal.
Maybe you are looking at it wrong. Maybe it simply means that they have advanced their ex-div date by three weeks so you know sooner what the div is compared to a stock that only had a two day gap.
My stock declined an extra 1.1% July 9th exactly what I will get on August 1st quarterly dividend. That is SOP so Verizon isn't doing anything unusual.

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Re: From ex-dividend to distrubution where is my money?

Post by Grt2bOutdoors » Sun Jul 14, 2019 7:20 pm

J G Bankerton wrote:
Sun Jul 14, 2019 5:12 pm
jebmke wrote:
Sun Jul 14, 2019 4:19 pm
J G Bankerton wrote:
Sun Jul 14, 2019 4:16 pm
Yohanson wrote:
Sun Jul 14, 2019 11:37 am
On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>
Vanguard pays in one or two days depending on if it is an ETF or the regular fund. Three weeks seems excessive to me but that seams the normal.
Maybe you are looking at it wrong. Maybe it simply means that they have advanced their ex-div date by three weeks so you know sooner what the div is compared to a stock that only had a two day gap.
My stock declined an extra 1.1% July 9th exactly what I will get on August 1st quarterly dividend. That is SOP so Verizon isn't doing anything unusual.
And what did the telecommunications sector do on July 9th? What did the market do?
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Re: From ex-dividend to distrubution where is my money?

Post by Yohanson » Sun Jul 14, 2019 10:52 pm

jebmke wrote:
Sun Jul 14, 2019 4:19 pm
J G Bankerton wrote:
Sun Jul 14, 2019 4:16 pm
Yohanson wrote:
Sun Jul 14, 2019 11:37 am
On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>
Vanguard pays in one or two days depending on if it is an ETF or the regular fund. Three weeks seems excessive to me but that seams the normal.
Maybe you are looking at it wrong. Maybe it simply means that they have advanced their ex-div date by three weeks so you know sooner what the div is compared to a stock that only had a two day gap.
No, the ex-dividend dates and pay dates have never changed in at least 20 years. They have always been about 3 weeks apart. Since we switched to Fido, we now have to wait the 3 weeks to get our dividend payment just like regular investors do.

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Re: From ex-dividend to distrubution where is my money?

Post by ryman554 » Mon Jul 15, 2019 12:29 am

J G Bankerton wrote:
Sun Jul 14, 2019 5:12 pm
jebmke wrote:
Sun Jul 14, 2019 4:19 pm
J G Bankerton wrote:
Sun Jul 14, 2019 4:16 pm
Yohanson wrote:
Sun Jul 14, 2019 11:37 am
On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>
Vanguard pays in one or two days depending on if it is an ETF or the regular fund. Three weeks seems excessive to me but that seams the normal.
Maybe you are looking at it wrong. Maybe it simply means that they have advanced their ex-div date by three weeks so you know sooner what the div is compared to a stock that only had a two day gap.
My stock declined an extra 1.1% July 9th exactly what I will get on August 1st quarterly dividend. That is SOP so Verizon isn't doing anything unusual.
I don't understand what your question is.

On July 9, Verizon announced a dividend of X cents/share for stockholders of record. On August 1, those shareholders receive X cents/share of stock held on July9.

Where does stock price come into it?

It comes into it because the stock price decreases X cents (per share) after the ex-dividend date. It's worth that exact amount less the next day because the dividend has "already" been paid out... Even though it's not in your checking account.

It must be worth that amount less because, absent anything external, an asset worth $Y is worth $Y - $X plus $X in cash.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Mon Jul 15, 2019 10:30 am

ryman554 wrote:
Mon Jul 15, 2019 12:29 am

I don't understand what your question is.
My question is where is my money from July 9th until August 1st. On July 9th my stock dropped by 1.1% because of dividedns, if I sell on that date I don't get my dividend money until August 1st. Where is my money for three weeks?

Vanguard holds the money for 1, 2 or 3 days depending if dividends are reinvested or paid to an ETF or regular fund. I reinvest dividends and Verizon still holds my money for three weeks.

I know where Vanguard gets the dividend money form, the stocks it holds. Where does Verizon get the money from and where is it for three weeks.


"Ex-dividend date
The date when a distribution of dividends and/or capital gains is deducted from the share price of a mutual fund or stock. On the ex-dividend date, the share price drops by the amount of the distribution (plus or minus any market activity)."

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Re: From ex-dividend to distrubution where is my money?

Post by jebmke » Mon Jul 15, 2019 10:31 am

J G Bankerton wrote:
Mon Jul 15, 2019 10:30 am
Where does Verizon get the money from and where is it for three weeks.
They earn it selling products and services.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Mon Jul 15, 2019 10:54 am

jebmke wrote:
Mon Jul 15, 2019 10:31 am
J G Bankerton wrote:
Mon Jul 15, 2019 10:30 am
Where does Verizon get the money from and where is it for three weeks.
They earn it selling products and services.
Yes they have revenue of $130 billion a year. Somehow they sell value of shares and not shares themselves. It must be creative booking where the money comes from.

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Re: From ex-dividend to distrubution where is my money?

Post by jebmke » Mon Jul 15, 2019 11:00 am

J G Bankerton wrote:
Mon Jul 15, 2019 10:54 am
Yes they have revenue of $130 billion a year. Somehow they sell value of shares and not shares themselves. It must be creative booking where the money comes from.
Not sure I follow where you are coming from. VZ is an operating company. At the end of 2018 they had $3.8 billion of cash on hand. Their operating cash flow was $34 billion and their dividend payout was $9.8B.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: From ex-dividend to distrubution where is my money?

Post by Turbo29 » Mon Jul 15, 2019 11:00 am

J G Bankerton wrote:
Mon Jul 15, 2019 10:30 am
ryman554 wrote:
Mon Jul 15, 2019 12:29 am

I don't understand what your question is.
My question is where is my money from July 9th until August 1st. On July 9th my stock dropped by 1.1% because of dividedns, if I sell on that date I don't get my dividend money until August 1st. Where is my money for three weeks?
I would say legally, it's not your money until August 1. They don't have to pay a dividend at all. When they decided to they stated, we will give a dividend to every shareholder of record on 7/9 and we will give it to them on 8/1. You have no right to that money prior to 8/1.

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Re: From ex-dividend to distrubution where is my money?

Post by Walkure » Mon Jul 15, 2019 11:50 am

J G Bankerton wrote:
Mon Jul 15, 2019 10:30 am
ryman554 wrote:
Mon Jul 15, 2019 12:29 am

I don't understand what your question is.
My question is where is my money from July 9th until August 1st. On July 9th my stock dropped by 1.1% because of dividedns, if I sell on that date I don't get my dividend money until August 1st. Where is my money for three weeks?

Vanguard holds the money for 1, 2 or 3 days depending if dividends are reinvested or paid to an ETF or regular fund. I reinvest dividends and Verizon still holds my money for three weeks.

I know where Vanguard gets the dividend money form, the stocks it holds. Where does Verizon get the money from and where is it for three weeks.


"Ex-dividend date
The date when a distribution of dividends and/or capital gains is deducted from the share price of a mutual fund or stock. On the ex-dividend date, the share price drops by the amount of the distribution (plus or minus any market activity)."
I started to answer this and stumbled on another question, perhaps someone else can help out here. Things are getting obscured by comparing a single company, VZ, to a large fund operated by the likes of Vanguard. When you get that dividend in 1-3 days from a fund relative to ex-div date, that is because the fund is marked to market by NAV daily and there literally is nowhere to "put the money" once it goes ex-div beyond what settlement times require to land in your account. But say VZ is a holding within a fund like VFINX (Vanguard SP 500 Index). VZ goes ex-div on 7/9, and the next quarterly ex-div date for VFINX is around the end of Q3, something like 9/22. Once VZ pays on 8/1, that cash goes into the Vanguard Market Liquidity fund holding of VFINX (and typically the fund buys futures to reduce cash drag between dividends). At that point, selling VFINX between 8/1 and 9/22 gets you a NAV that includes the cash before VFINX pays out the div. But if you sell VFINX between 7/9 and 8/1, the NAV of the fund is reduced by the lower price of VZ, without any claim on the cash that is payable in the future? Or does Vanguard include a sort of "dividends receivable" in its NAV calculation?

alex_686
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Re: From ex-dividend to distrubution where is my money?

Post by alex_686 » Mon Jul 15, 2019 12:13 pm

Walkure wrote:
Mon Jul 15, 2019 11:50 am
Or does Vanguard include a sort of "dividends receivable" in its NAV calculation?
Former fund accountant here. Funds are required to work off accural accounting, not cash. When the stock goes ex-div the fund records this as an asset.

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Re: From ex-dividend to distrubution where is my money?

Post by Walkure » Mon Jul 15, 2019 12:20 pm

alex_686 wrote:
Mon Jul 15, 2019 12:13 pm
Walkure wrote:
Mon Jul 15, 2019 11:50 am
Or does Vanguard include a sort of "dividends receivable" in its NAV calculation?
Former fund accountant here. Funds are required to work off accural accounting, not cash. When the stock goes ex-div the fund records this as an asset.
Thank you! I figured it had to be something like this, appreciate the confirmation.

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Re: From ex-dividend to distrubution where is my money?

Post by ohai » Mon Jul 15, 2019 12:38 pm

Turbo29 wrote:
Mon Jul 15, 2019 11:00 am
J G Bankerton wrote:
Mon Jul 15, 2019 10:30 am
ryman554 wrote:
Mon Jul 15, 2019 12:29 am

I don't understand what your question is.
My question is where is my money from July 9th until August 1st. On July 9th my stock dropped by 1.1% because of dividedns, if I sell on that date I don't get my dividend money until August 1st. Where is my money for three weeks?
I would say legally, it's not your money until August 1. They don't have to pay a dividend at all. When they decided to they stated, we will give a dividend to every shareholder of record on 7/9 and we will give it to them on 8/1. You have no right to that money prior to 8/1.
No, it is your money, as long as you did not sell the stock before 7/9/2019. 7/10/2019 is the Record Date of the dividend, which means that if you held the stock as late as 7/10/2019, you are legally entitled to the dividend that will be paid on 8/1/2019. Even if you sell the stock after 7/9/2019 and don't hold it as of 8/1/2019, you will still get paid.

What happens to the money before that? The company has it on their balance sheet (cash, minus accounts payable or something along those lines).

I don't know to what extent the company can earn interest on this dividend payable, but it seems that they do.

I got pretty upset when I learned of some very long holding periods for these dividends. For instance, SPY record date for the last dividend is 6/24/2019, but it is payable on 7/31/2019. [OT comment removed by moderator prudent]

jebmke
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Re: From ex-dividend to distrubution where is my money?

Post by jebmke » Mon Jul 15, 2019 1:08 pm

is SPY an operating company? If so, they have no obligation to pay a dividend at all.
When you discover that you are riding a dead horse, the best strategy is to dismount.

alex_686
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Re: From ex-dividend to distrubution where is my money?

Post by alex_686 » Mon Jul 15, 2019 1:19 pm

jebmke wrote:
Mon Jul 15, 2019 1:08 pm
is SPY an operating company? If so, they have no obligation to pay a dividend at all.
SPY is la Registered Investment Company, and RICs have to pay out their income as dividends each year.

jebmke
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Re: From ex-dividend to distrubution where is my money?

Post by jebmke » Mon Jul 15, 2019 2:26 pm

alex_686 wrote:
Mon Jul 15, 2019 1:19 pm
jebmke wrote:
Mon Jul 15, 2019 1:08 pm
is SPY an operating company? If so, they have no obligation to pay a dividend at all.
SPY is la Registered Investment Company, and RICs have to pay out their income as dividends each year.
There seems to be a mixing in the discussion between RICs and operating companies that is causing a lot of confusion on this thread. More than one poster has mixed the two in one post and it simply isn't comparable.
When you discover that you are riding a dead horse, the best strategy is to dismount.

ohai
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Re: From ex-dividend to distrubution where is my money?

Post by ohai » Mon Jul 15, 2019 2:33 pm

SPY is the most popular S&P 500 ETF. Sure, it is not comparable to single companies in some ways, but where dividends are concerned, I don't see that is different.

Both declare dividends and have some Record Date. Both have Payment Dates what are past their Record Dates. Both must pay dividends to shareholders who own the shares as of the Record Date.

OP's question is identical in answer for either case.

Companies do not have to pay dividends either, if they don't want to. I don't see how that was relevant.

Turbo29
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Re: From ex-dividend to distrubution where is my money?

Post by Turbo29 » Mon Jul 15, 2019 2:39 pm

ohai wrote:
Mon Jul 15, 2019 12:38 pm
Turbo29 wrote:
Mon Jul 15, 2019 11:00 am
J G Bankerton wrote:
Mon Jul 15, 2019 10:30 am
ryman554 wrote:
Mon Jul 15, 2019 12:29 am

I don't understand what your question is.
My question is where is my money from July 9th until August 1st. On July 9th my stock dropped by 1.1% because of dividedns, if I sell on that date I don't get my dividend money until August 1st. Where is my money for three weeks?
I would say legally, it's not your money until August 1. They don't have to pay a dividend at all. When they decided to they stated, we will give a dividend to every shareholder of record on 7/9 and we will give it to them on 8/1. You have no right to that money prior to 8/1.
No, it is your money, as long as you did not sell the stock before 7/9/2019. 7/10/2019 is the Record Date of the dividend, which means that if you held the stock as late as 7/10/2019, you are legally entitled to the dividend that will be paid on 8/1/2019.
Yes, you are legally entitled to it on 8/1/2019. You are not legally entitled to it 1 min or more earlier than that. So it's not your money until then. It is a contract to receive money on 8/1.

I have a treasury that matures 7/18/19. It is my money and they will pay me $1000 for it then. I can rant and rave and ask "What are they doing with my money between now and then?" Everyone would realize that that is a silly question. It's none of my concern what they do with it between now and the day they owe it to me.

I have a contract to pay my mortgage holder a certain amount of money on 8/1/19. Is it their money now or my money? What I do with the money between now and 8/1 is none of their business.
Last edited by Turbo29 on Mon Jul 15, 2019 2:45 pm, edited 2 times in total.

ohai
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Re: From ex-dividend to distrubution where is my money?

Post by ohai » Mon Jul 15, 2019 2:43 pm

I think this is becoming a semantical argument. It is your money, you just don't get it until 8/1/2019.

If you sell stock from Vanguard, they deposit your money in 2 days. It's still your money.

If you have a car in the shop and they only release it to you after signing a paper, it's still your car.

It's still your money when you are to a receive a dividend. A company cannot legally not pay you after the Record Date. To me, that means you are legally entitled to the money. If your definition of legal entitlement is different, ok sure. As long as the overall situation is clear.

alex_686
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Re: From ex-dividend to distrubution where is my money?

Post by alex_686 » Mon Jul 15, 2019 3:01 pm

jebmke wrote:
Mon Jul 15, 2019 2:26 pm
alex_686 wrote:
Mon Jul 15, 2019 1:19 pm
jebmke wrote:
Mon Jul 15, 2019 1:08 pm
is SPY an operating company? If so, they have no obligation to pay a dividend at all.
SPY is la Registered Investment Company, and RICs have to pay out their income as dividends each year.
There seems to be a mixing in the discussion between RICs and operating companies that is causing a lot of confusion on this thread. More than one poster has mixed the two in one post and it simply isn't comparable.
I think the issue is that people are confused on the difference between cash and accural accounting.

Broken Man 1999
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Re: From ex-dividend to distrubution where is my money?

Post by Broken Man 1999 » Mon Jul 15, 2019 3:26 pm

I don't care one way or the other, as I have been getting dividends for decades, and I know the drill pretty well.

Still, with the ginormous computing power available today, I would think it would be pretty easy to start snugging up that three weeks of time to progressively shorter and shorter lengths of time. I would wager it could be done with few issues.

Things have changed immensely from the time when dividend checks were printed and mailed to gazillion holders of stocks.

OTOH, not sure there are any good reasons for the companies to change the current timing, even if they were willing and able to do so. Probably a change would get balled up in the regulator's arena for who knows how long, if in fact this timing is required by some agency for some important reason no one remembers.

OP, you could invest in Mr Buffett's fave, Berkshire Hathaway, as currently the stock pays no dividend to shareholders.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Re: From ex-dividend to distrubution where is my money?

Post by MotoTrojan » Mon Jul 15, 2019 3:54 pm

J G Bankerton wrote:
Sun Jul 14, 2019 4:16 pm
Yohanson wrote:
Sun Jul 14, 2019 11:37 am
On a total side note, my megacorp used to pay their dividend to us stockholders in the 401K on the ex-dividend date. We were getting our dividend in the form of company stock at the price at the end of the day on the ex-dividend date. Now that our 401K is managed by Fido, we get it on the pay date. <sniff>
Vanguard pays in one or two days depending on if it is an ETF or the regular fund. Three weeks seems excessive to me but that seams the normal.
Vanguard is the one that’s actually holding your money from you. The companies in index funds are paying dividends all quarter. Vanguard holds them until ex-div and then gives you a lump.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Mon Jul 15, 2019 5:42 pm

Turbo29 wrote:
Mon Jul 15, 2019 11:00 am
I would say legally, it's not your money until August 1.
I leaglly owned the stock on July 9th when the value dropped by the cost of the dividend. Verizon moves my money from stock to cash and takes three weeks to reinvest it.
MotoTrojan wrote:
Mon Jul 15, 2019 3:54 pm
Vanguard is the one that’s actually holding your money from you. The companies in index funds are paying dividends all quarter. Vanguard holds them until ex-div and then gives you a lump.
I assume Vanguard holds the dividends in the cash portion of the fund. The value of the money disappears at most three days.
Turbo29 wrote:
Mon Jul 15, 2019 11:00 am
They don't have to pay a dividend at all.
That is true but they did pay a dividend three weeks after they took the value out of my stock.

Three weeks seems standart for individual stock. I'm not sure how they get the money form the value of the stock without selling stock but they must make money form my money for three weeks.

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Re: From ex-dividend to distrubution where is my money?

Post by jebmke » Mon Jul 15, 2019 5:51 pm

J G Bankerton wrote:
Mon Jul 15, 2019 5:42 pm
I leaglly owned the stock on July 9th when the value dropped by the cost of the dividend. Verizon moves my money from stock to cash and takes three weeks to reinvest it.
What does this even mean? They sit on a pile of cash and distribute it at their discretion, on the date they promised to pay it. Maybe VZ isn't for you.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Mon Jul 15, 2019 5:58 pm

jebmke wrote:
Mon Jul 15, 2019 5:51 pm
J G Bankerton wrote:
Mon Jul 15, 2019 5:42 pm
I leaglly owned the stock on July 9th when the value dropped by the cost of the dividend. Verizon moves my money from stock to cash and takes three weeks to reinvest it.
What does this even mean? They sit on a pile of cash and distribute it at their discretion, on the date they promised to pay it. Maybe VZ isn't for you.
Verizon has been very, very good to me. All companies hold the money for three weeks, it is SOP.
J G Bankerton wrote:
Sun Jul 14, 2019 5:12 pm
My stock declined an extra 1.1% July 9th exactly what I will get on August 1st quarterly dividend. That is SOP so Verizon isn't doing anything unusual.

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Re: From ex-dividend to distrubution where is my money?

Post by coachd50 » Mon Jul 15, 2019 6:43 pm

J G Bankerton wrote:
Mon Jul 15, 2019 5:42 pm
Turbo29 wrote:
Mon Jul 15, 2019 11:00 am
I would say legally, it's not your money until August 1.
I leaglly owned the stock on July 9th when the value dropped by the cost of the dividend. Verizon moves my money from stock to cash and takes three weeks to reinvest it.
MotoTrojan wrote:
Mon Jul 15, 2019 3:54 pm
Vanguard is the one that’s actually holding your money from you. The companies in index funds are paying dividends all quarter. Vanguard holds them until ex-div and then gives you a lump.
I assume Vanguard holds the dividends in the cash portion of the fund. The value of the money disappears at most three days.
Turbo29 wrote:
Mon Jul 15, 2019 11:00 am
They don't have to pay a dividend at all.
That is true but they did pay a dividend three weeks after they took the value out of my stock.

Three weeks seems standart for individual stock. I'm not sure how they get the money form the value of the stock without selling stock but they must make money form my money for three weeks.
No, Verizon did not move "your money" anywhere. Keep in mind, that unless you actually bought an IPO, you didn't even really involve yourself in a financial transaction with Verizon. They don't have “your money”

Verizon did not "take value out of your stock". Some of your comments seem to suggest that you believe Verizon is directly responsible for their stock price. Stock price is set by a market. Stock price is based on what other's think the share of ownership in the company is worth. Immediately following the ex dividend date, the stock is going to be worth less because someone looking to buy that stock knows they will not be entitled to that particular cashflow. Verizon has nothing to do with that. That is the market created by buyers and sellers.

You are conflating two different groups. As others have stated, all Verizon has done has made an announcement and set a date which would be used to denote which individuals would be paid dividends and the date on which that cash would be distributed. Therefore, stock buyers after this date would not be entitled to a particular cash flow (which leads to the lower stock price). Where is the cash? depends on how the CFO and company chooses to finance that cash payment. Likely sitting on the balance sheet in its cash/cash equivalent accounts.

Lastly, you stated that a dividend reduces a companies income earlier in this thread. This is not correct. It would reduce cash. Cash is a balance sheet accoubt, income is an income statement account. Completely different things

Accounting is fun but the above are all examples why accounting isnt just “math and numbers”. OP you are having difficulty understanding people’s answers here because you don’t understand financial accounting. It’s ok, most people don’t. But to show you how far off you are on some of the concepts (and thus, why you are struggling with this) here are some analogies from various fields that represent how you are misunderstanding some key financial accounting concepts :
1) If you are a tech guy--It would be similar to someone thinking the internet and the world wide web are the same thing.
2) If you are an engineer/physicist it would be similar to someone thinking that velocity and acceleration are the same thing.
3) If you are in medicine, it would be similar to someone thinking viruses and bacteria are the same thing
4) If you are in law, it would be similar to someone thinking criminal law and civial law are the same thing.

I don't say this as a negative, or to demean you, but just to try and help you see some perspective and realize why you don't seem to understand that your initial question is a non starter and why some don't understand the question you are asking. Where is "your money"? As I said, it is most likely on the balance sheet in cash or cash equivalents (meaning it is sitting in a "bank" as cash, or some short term security).
Last edited by coachd50 on Mon Jul 15, 2019 9:09 pm, edited 7 times in total.

retiringwhen
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Re: From ex-dividend to distrubution where is my money?

Post by retiringwhen » Mon Jul 15, 2019 7:21 pm

Coach for the win.....

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Tue Jul 16, 2019 9:21 am

Let me rephrase the question. How does a company take value out of a stock to pay a dividend without selling stock?

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Re: From ex-dividend to distrubution where is my money?

Post by retiringwhen » Tue Jul 16, 2019 9:43 am

J G Bankerton wrote:
Tue Jul 16, 2019 9:21 am
Let me rephrase the question. How does a company take value out of a stock to pay a dividend without selling stock?
They don't, re-read coachd's answer.

I will try with slightly different words.

The company has no role in setting the price of a stock already listed on an exchange. The ex-Dividend process is simply a notification to shareholders and the market that a payment will be coming on a specific date in future, nothing more, nothing less. The market may or may not re-price the value of the stock based upon this information (this is a good example of where the EMH is a reasonable explanation of how the market works.)

From an accounting perspective, the funds are an asset on the balance sheet until paid. I assume (likely true), the company records a liability transaction (account payable-like) for the dividend at the date of the ex-Div announcement, but that is just a paper drill. The funds are still in Verizon's account(s) until the day Verizon cuts a check to the clearinghouse that pays stock shareholders.

If someone is doing fundamental analysis of the companies books, then these machinations matter, but even this short term process (usually less than a month) come and go between any time the company publishes their balance sheet and cash flows meaning that they don't even impact that in a material way.

I believe the fundamental thing you missing is that the price that a stock is selling for on the market has no material relationship to the balance sheet the company keeps internally. They have no link except in the mind of the market.

This article may help, may not.... Not that nowhere in the article's discussion is the company mentioned when it comes to setting the market price.

https://finance.zacks.com/stock-price-c ... -3571.html

Remember everything I describe is for a single common stock. As mentioned other places the accounting and pricing processes for Mutual Funds and ETFs is quite different and should not be compared to a common stock dividend.

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Re: From ex-dividend to distrubution where is my money?

Post by J G Bankerton » Tue Jul 16, 2019 10:10 am

retiringwhen wrote:
Tue Jul 16, 2019 9:43 am
J G Bankerton wrote:
Tue Jul 16, 2019 9:21 am
Let me rephrase the question. How does a company take value out of a stock to pay a dividend without selling stock?
They don't, re-read coachd's answer.
Does the price of the stock drop to pay the dividend? Yes it does.

"Ex-dividend date
The date when a distribution of dividends and/or capital gains is deducted from the share price of a mutual fund or stock. On the ex-dividend date, the share price drops by the amount of the distribution (plus or minus any market activity)."

So far the best answer is;
FrankLUSMC wrote:
Sat Jul 13, 2019 4:56 pm
In the Matrix
1 :mrgreen:
The Matrix is run by "specialists". "Stock market specialists will mark down the price of a stock on its ex-dividend date by the amount of the dividend."

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Re: From ex-dividend to distrubution where is my money?

Post by Boglegrappler » Tue Jul 16, 2019 10:32 am

Let me rephrase the question. How does a company take value out of a stock to pay a dividend without selling stock?
It might help your thinking about this to consider how buyers regard a company. When you buy a share of stock, you own that company forever. When a company pays a dividend, you still own that company forever, and you're going to get the dividend too, in a specified amount of time. The stock price will rise theoretically to reflect that, and then fall on the day that you are no longer going to receive the dividend if you buy the stock.

This isn't that big a deal, and is obscured for the most part by other market fluctuations.

Edited to add:
Does the price of the stock drop to pay the dividend? Yes it does.
This is incorrectly phrased. The stock price doesn't drop in order to pay the dividend. It drops because the price before the ex-divdend date includes the companies future plus the next dividend, and on the following day an owner doesnt receive that dividend. Better phrasing would be:

Does the price of the stock drop because the company paid the dividend. YEs it does.
Last edited by Boglegrappler on Tue Jul 16, 2019 10:40 am, edited 1 time in total.

dbr
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Re: From ex-dividend to distrubution where is my money?

Post by dbr » Tue Jul 16, 2019 10:35 am

And, don't forget if you sell the stock after it is ex-dividend you still get the dividend and the person you sell the stock to does not get that dividend. An option if you don't want to wait for your money is to sell the stock before it goes ex-dividend.

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Re: From ex-dividend to distrubution where is my money?

Post by sfnerd » Tue Jul 16, 2019 10:47 am

retiringwhen wrote:
Tue Jul 16, 2019 9:43 am
J G Bankerton wrote:
Tue Jul 16, 2019 9:21 am
Let me rephrase the question. How does a company take value out of a stock to pay a dividend without selling stock?
They don't, re-read coachd's answer.

I will try with slightly different words.

The company has no role in setting the price of a stock already listed on an exchange. The ex-Dividend process is simply a notification to shareholders and the market that a payment will be coming on a specific date in future, nothing more, nothing less. The market may or may not re-price the value of the stock based upon this information (this is a good example of where the EMH is a reasonable explanation of how the market works.)

From an accounting perspective, the funds are an asset on the balance sheet until paid. I assume (likely true), the company records a liability transaction (account payable-like) for the dividend at the date of the ex-Div announcement, but that is just a paper drill. The funds are still in Verizon's account(s) until the day Verizon cuts a check to the clearinghouse that pays stock shareholders.

If someone is doing fundamental analysis of the companies books, then these machinations matter, but even this short term process (usually less than a month) come and go between any time the company publishes their balance sheet and cash flows meaning that they don't even impact that in a material way.

I believe the fundamental thing you missing is that the price that a stock is selling for on the market has no material relationship to the balance sheet the company keeps internally. They have no link except in the mind of the market.

This article may help, may not.... Not that nowhere in the article's discussion is the company mentioned when it comes to setting the market price.

https://finance.zacks.com/stock-price-c ... -3571.html

Remember everything I describe is for a single common stock. As mentioned other places the accounting and pricing processes for Mutual Funds and ETFs is quite different and should not be compared to a common stock dividend.
Exactly, they are not "taking value". They are saying that on August 1, they are going to take the dividend out of the stock and pay it. And they make this official on July 9th, so the market says "hey, this company is going to have less cash soon, because it will pay a dividend out, so it will be worth less".

In other words, if you buy the stock after the ex dividend date, you don't get the dividend, so the stock is worth less to you.

Until August 1st, the money is in Verizon's bank, where it always was. On August 1st, they send the money to the shareholders, via their brokers.

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Re: From ex-dividend to distrubution where is my money?

Post by alex_686 » Tue Jul 16, 2019 10:52 am

Boglegrappler wrote:
Tue Jul 16, 2019 10:32 am
Let me rephrase the question. How does a company take value out of a stock to pay a dividend without selling stock?
It might help your thinking about this to consider how buyers regard a company. When you buy a share of stock, you own that company forever. When a company pays a dividend, you still own that company forever, and you're going to get the dividend too, in a specified amount of time. The stock price will rise theoretically to reflect that, and then fall on the day that you are no longer going to receive the dividend if you buy the stock.

This isn't that big a deal, and is obscured for the most part by other market fluctuations.

Edited to add:
Does the price of the stock drop to pay the dividend? Yes it does.
This is incorrectly phrased. The stock price doesn't drop in order to pay the dividend. It drops because the price before the ex-divdend date includes the companies future plus the next dividend, and on the following day an owner doesnt receive that dividend. Better phrasing would be:

Does the price of the stock drop because the company paid the dividend. YEs it does.
To extend a bit, the stock drops because of investors reactions. If the stock did not drop by the dividend amount I could fo an arbitrage trade that would net me free riskless money - and there are people who do this - for the fraction of the penny. The market is very efficient here.

The company has nothing to do with the drop.

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Re: From ex-dividend to distrubution where is my money?

Post by jsprag » Tue Jul 16, 2019 10:58 am

J G Bankerton wrote:
Tue Jul 16, 2019 10:10 am
Does the price of the stock drop to pay the dividend? Yes it does.
Repeating it does not make it true. Are you trolling us? It feels like you're trolling us...

Price drops because of [the market reaction to] the dividend, not to pay the dividend.


Between the ex-dividend and payment date, the cash is (in general) exactly where it was before the ex-dividend date: in Verizon's cash or cash-like accounts.

As a shareholder on the record date is it "your" cash? In a manner of speaking, sure. But your ability to access it is subject to the laws, regulations, and policies that govern this type of activity. Just like money deposited in your local bank is "yours", but (ATM usage aside) you don't have unfettered access it during non-banking hours.

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Re: From ex-dividend to distrubution where is my money?

Post by H-Town » Tue Jul 16, 2019 11:01 am

J G Bankerton wrote:
Tue Jul 16, 2019 9:21 am
Let me rephrase the question. How does a company take value out of a stock to pay a dividend without selling stock?
They don't. They can't. They won't.

Dividends is bad, real bad, terribly bad. They carve out a piece of accumulated earnings and profits (your own equity) and pay it to you. They paid tax and you gonna pay tax on that. Double taxation!! Does it sit right with you? It's your own money and the tax man taxes it twice and left you with a sack of potato. :mrgreen:

Community college has accounting class. You likely already paid tax for the community college. Why not take a class? It should be fun and eye opening.

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Re: From ex-dividend to distrubution where is my money?

Post by jsprag » Tue Jul 16, 2019 11:08 am

sfnerd wrote:
Tue Jul 16, 2019 10:47 am
Exactly, they are not "taking value". They are saying that on August 1, they are going to take the dividend out of the stock and pay it. And they make this official on July 9th, so the market says "hey, this company is going to have less cash soon, because it will pay a dividend out, so it will be worth less".
Can I suggest a modification?

Verizon pays dividends from retained earnings and does not "...take the dividend out of the stock and pay it." since they no longer own the stock. Perhaps:
Exactly, they are not "taking value". They are saying that on August 1, they are going to take the dividend out of the stock their bank account and pay it. And they make this official on July 9th, so the market says "hey, this company is going to have less cash soon, because it will pay a dividend out, so it will be worth less".

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Re: From ex-dividend to distrubution where is my money?

Post by dbr » Tue Jul 16, 2019 11:09 am

jsprag wrote:
Tue Jul 16, 2019 10:58 am
J G Bankerton wrote:
Tue Jul 16, 2019 10:10 am
Does the price of the stock drop to pay the dividend? Yes it does.
Repeating it does not make it true. Are you trolling us? It feels like you're trolling us...

Price drops because of [the market reaction to] the dividend, not to pay the dividend.


Between the ex-dividend and payment date, the cash is (in general) exactly where it was before the ex-dividend date: in Verizon's cash or cash-like accounts.

As a shareholder on the record date is it "your" cash? In a manner of speaking, sure. But your ability to access it is subject to the laws, regulations, and policies that govern this type of activity. Just like money deposited in your local bank is "yours", but (ATM usage aside) you don't have unfettered access it during non-banking hours.
Sometimes people use language that is a poor choice of words to describe a correct concept and sometimes language that reflects an actual misunderstanding of something. On this thread I am not sure which is the case at different points in the conversation. The couple of posts about accounting and the posts about market and price are correct. I think the OP is really just wondering why there is a delay beween ex-div and payment.

People might want to do some looking into whether or not anyone benefits from this and especially relative to those stock-like instruments on the exchange called ETFs.

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Re: From ex-dividend to distrubution where is my money?

Post by jsprag » Tue Jul 16, 2019 11:24 am

dbr wrote:
Tue Jul 16, 2019 11:09 am
I think the OP is really just wondering why there is a delay beween ex-div and payment.
That's a reasonable question, and one that's certainly been lost in the back and forth over relationship between dividend and stock price.

I have no idea why it can take 3+ weeks, and I'd also be curious what structural limitations or historical precedent exists in the regulatory, financial processes, security exchanges, etc... that shape the timeline.

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