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For the record, Getafgrip’s full sentence, which I foolishly thought referred to an unchallenged cancellation, was this:
‘The strategy they alighted on was 2/3rds cancellation of anticipated Interim Dividends for the immediate future! I am not aware of any legal challenges to this, but they would have no foundation, even if they had announced the Interim Dividend.’
(taken from his 12.59 post yesterday)
Apparently he was not talking about a cancellation that had not been challenged - so I hope we’ve all got that straight now. Silly dyslexic me!
Cheers Barrie. Getafgrip was perfectly entitled to criticise my apparently controversial comment that divi payment day is irrelevant from an sp movement point of view. Our debate wasn't very illuminating though, because it descended into bickering about who said what and what did they mean rather than revealing any useful information....
So apologies for my next post.
Boyobach I’ve filtered getafgrip as I’m really not interested in anything other than a focused and informed technical discussion and not people who accuse you of using “plagiarised charts” when you are in fact using them to support reasoned arguments
Two-thirds of the Interim Dividend was cancelled, changed non-benefically for shareholders, reduced, not sent out anymore last year! Everyone else noticed!
The following is simply a dyslexic invention of yours" which you misleadingly referred to as a cancellation that had not been challenged!" I never said that.
Investors can challenge all sorts of issues with governance, company announcement, declarations, and policy issues, my point is that there is no legal basis to challenge a cancelled Interim Dividend, so good luck to them. I completely agree that you personally don't think the Dividend payment date, and the exit of say $1billion dollars from the balance sheet, and the end of this potential "emergency fund" for the company has any value, or impact on the share price.
Hopefully it will not and you will be able to show everyone your plagiarised charts detailing the price of Brent Crude in the foothills of Kathmandu, & how it has impacted on the RDSB share performance!
Getafgrip: You seem to be wriggling away from the initial argument about whether a share price should be expected to change significantly on dividend payment day. My view remains that, for a business in proper control of cash flows, the sp mainly adjusts on ex dividend day and in anticipation of the payment rather than on the day it actually occurs, rendering payment day itself largely irrelevant in the context of sp movement.
In the course of this debate, you suggested that dividend payments could be stopped between ex-dividend day and payment day, which could surely be described as an unexpected cancellation that might be challenged. You then implied some kind of parallel between that scenario and RDS’ reduction of dividend last year, which you misleadingly referred to as a cancellation that had not been challenged. I have also never said that cash flow is unimportant in the context of running a business. You can twist around the semantics as much as you like but you still haven’t justified your criticism of my original statement that payment day is ordinarily irrelevant in the context of sp movements. Nor have you produced any supporting references. The subject is now closed as far as I’m concerned and I don’t intend to respond any further.
I did not state that there was an "unexpected cancellation" surely you are being misleading! On the day that a $billion is paid out in dividend, what effect do you think it has on something called Cash Flow? The companies that I have worked for and owned have always considered Cash Flow to be of critical importance. But I completely understand that you think it is irrelevant on the day dividends are paid!!!
'The strategy they alighted on was 2/3rds cancellation of anticipated Interim Dividends for the immediate future....'
Misleadingly put Getafgrip - RDS properly declared that the dividend policy was being changed and this was fully approved and communicated prior to ex-div date. There was no 'unexpected cancellation' involved after the declaration.
Shareholders can legally pursue the cancellation of a Final Dividend payment by the company after it has been sanctioned. They cannot pursue the cancellation of an Interim Dividend payment by the company. This is why Shell does not pay a defined Final Dividend.
When peak Panicdemic hit last year, do you really think that the Board of Shell did not consider Interim Dividend cancellation or suspension at various points whether declared or not? They would have been failing in their duties if they had not. The strategy they alighted on was 2/3rds cancellation of anticipated Interim Dividends for the immediate future! I am not aware of any legal challenges to this, but they would have no foundation, even if they had announced the Interim Dividend.
Reading this blog I had been labouring under the misapprehension that this had a direct impact on the Shell share price. Cue reaching for the Mumbo Jumbo & Black Magic view of the chartists! The interminable cacophony of negative moaning on this blog does not seem to be purely centred on the Ex-D point but also on the payment points (and almost every other day of the year, ), where investors receive only a third of what they were doing.
Personally, the triggers for buying RDSB, were the hammering the share price took when they reduced the dividend, the cataclysmic loss of business, together with going below £9.00 a share last October. It presented a great Capital Gains opportunity that for me was totally predictable & that is how things are panning out, whether I collar a dividend or two is of interest, but not very high on my radar. The 11th August could well be my ex-shareholder point, but this blog will be history for me well before that. Neither of us are going to take on board anything we each say, so that it is a discussion with no point whatsoever.
The market capitalisation of a company naturally adjusts with the sp on ex-dividend day, thereby anticipating the dividend outflow and marking the point beyond which new shareholders are not entitled to the payment. Any further market reaction to dividend payment would imply a lack of financial stability. If new shares are issued on payment day, resulting in dilution, then that’s a separate matter. In the unlikely event of a company canceling dividend payment after ex-div date then the sp would react immediately - and not, I think, positively in proportion to the retained cash! Serious legal challenges would almost certainly arise for a variety of very obvious reasons.
Here’s a second and comprehensive reference from me in which there is no mention whatsoever of any material impact upon an sp occurring on dividend payment date. I have yet to see anything credible that suggests otherwise:
The exceptional circumstances of Deepwater Horizon have no logical bearing on explanations of the generic and standard dividend payment process.
Apologies should read: "Shell could technically cancel......" Second Para, Second sentence
Although you consider the dividend payment date to be completely irrelevant. let's try another angle on this - It might be worth noting that all RDSB dividend payments are Interim Payments. They are paid without the necessity for shareholder approval, which is a legal requisite with the Final Dividend.
The Interim Dividend can be cancelled by the company at any time before the point of payment. The RDSB Interim Payment could technically cancel the payment for Monday the 21st June, technically today or tomorrow, if company circumstances determine this need. RDSB has legal control of this capital until the point of payment. On Monday there will hopefully be a cash outflow from the balance sheet paying the Interim Dividend to us all. At this exact point Shell will no longer have control of these funds! Even you will presumably not argue that this capital is not measured in $billions.
As you state categorically, the dividend payment date is irrelevant, so how could Shell's capitalisation or share price possibly be impacted by the loss of control of $billions exiting its balance sheet at a particular point!!
You were exactly right when you said that you didn't understand the mystery about Ex-D. Where did you get your reference from the Fiction shelf at the local library, or was it the Children's section?
You still pontificate on about it being completely irrelevant what date $Billions exit the balance sheet. You need to show more restraint someone might think you have a clue what you are talking about! Do you think it might have been of interest to BP when the Deepwater Horizon catastrophe started to unfold? I'll give you a clue, because you will need it, the answer is not to be found in your reference document.
I don't have to try - it's a fact. Some folks may think the payment date affects the sp - and I guess it could if sufficient investors decide to plough the cash immediately back into the company but, other than that, of course it doesn't.
The cash distribution is known and committed for payment well before the date it is actually paid - it makes no further difference to the company's book value once it is approved for payment. On and after ex-div date anyone acquiring shares should be aware that they will not qualify for the up-coming dividend and that the sp reflects this - irrespective of other factors that may have also influenced the price.
All reputable references on the subject explain this very simple process , eg:
'When one of your stocks pays a dividend, there will be one day when the stock price drops because of the dividend payment. This ex-dividend date effect actually works to maintain your investment value. This effect is temporary. '
It may be worth giving a few pointers on dividends not yet paid and their treatment:
A dividend not yet paid is classed as an Accrued Dividend or Dividend Payable on the Balance Sheet. A company will book its accrued dividends as a balance sheet liability from the declaration date until the dividend is actually paid to shareholders.
Any decrease in liabilities on the balance sheet is a use of funding and so represents a CASH OUTFLOW! Hopefully Shell considers the dividend payment date is relevant, otherwise we are all in trouble because it is measured in $Billions!
"The payment date is irrelevant!" Are you trying to be taken seriously?
I don't understand the mystery about ex-div - the opening price, arrived at within the pre-market auction, will ordinarily take account of the fact that purchasers will not receive the dividend. Anyone bidding in the auction and unaware of ex-div should not be in the auction. The ex-div discount will also account for the fact that capital for the distribution has been committed by the company - the payment date is actually irrelevant as the dividend exists as a liability when it is declared and approved. Other factors may weigh on the sp on ex-div day and sometimes the sp will even rise despite the ex-div adjustment. It is just one component that happens to affect the price that morning but, if the sp is already weak then it can sometimes appear to give it an extra nudge. The price will naturally recover over a period of time if the next dividend seems safe enough. If the yield is something like 4% per year paid in four lumps - Like RDS - then it only causes 1% variation in the sp anyway - so what's all the fuss about?
I see Char has reminded us about Vod, Sains and Tesco - which, along with RDS have three things in common: Firstly, they were all held at some time or other by Char. Secondly, he never tells us how his experiences with each them have improved his investment skills. Thirdly they all went up and down as, in fact, do all shares - especially when the market as a whole is moving, like today.
Just remember - the trend is your friend and, using the appropriate view to suit your trading or investment strategy, should tell you when things are potentially going off your personal set of rails: https://invst.ly/v6kn2 . RDS is till firmly on the right track for me - but then I know what my expectations are. If I allow my investment car to hit the curb and it rolls down an embankment then I know who to blame - and it won't be Vod, Sains, Tsco or RDS.
Poorg, it is possible to trade a few, keeping majority of your holding safe. I bought a few back today of the few I sold Wednesday. Hasn't made me rich, but as Tesco says......
yes the usual one step forward two steps back if i had the bottle for day trading i would be loaded
BP - an investor does not qualify for the dividend on the actual date the shares go Ex-D and obviously after that.
I know what you mean & it is very logical to think that a share should fall on the Ex-Dividend date, and they almost always do, by the amount of the dividend & usually +. It is a bit of a double whammy!
An investor buys the shares immediately beforehand & does so "Cum" dividend, that is the investor will receive the declared dividend. Or, buys Ex-Dividend on the day or following days, so they do not get the dividend. Once the shares have gone Ex-D, it is effectively the date of the commitment (in tandem with the announcement) that the company will pay the dividend to investors who qualified.
At this point the funds do not technically leave the company, but have to be accounted for generally from retained earnings, or if these are insufficient, occasionally from asset sales (which is generally a temporary measure). However, an investor buying the shares Ex-D is losing the dividend, so that market-makers usually mark the shares down in price as they are worth less to the investor. Depending on the fall & your interest in collecting dividends this can be a great time to buy the shares.
When the dividend payment finally goes out from the company, say for illustration purposes, in total it is a $1billion dividend payment then on that day the company capitalisation is worth $1billion less, as the company simply no longer has that money. So that generally the share price falls by this amount and often more, again depending on an investor affection for dividends this can be a great time to buy shares.
So short sighted Char! Have you seen the markets today…
Yes Jim800 you are quite correct
It’s the x div date that matters since after that date the shares aren’t bought with the benefit of the (12.26p this quarter) dividend payment being included. Dollar strength might be a factor or concerns that interest rate moves might choke off demand but the latter is a bit of a reach given the fed haven’t seen that as happening before 2023
Surely the share price should fall at the XD date, not the actual dividend payment date. If share price is falling on both XD date and payment date then something else is going on.
All company share capitalisations should fall by the amount they are about to pay out as a dividend, simply because those funds are then completely lost to the business. Quite often they fall by even more around this time.
Well that's the rally over again. Just showing all the tell tail signs that tescos , Saintsbury's & Vodafone. A small rally here & there, but it soon fizzles out.