Dividend question....please help

G

gimp570

I own a boat load of WCRX they are paying a $8.50 cash dividend to shareholders on record aug. 30 payable sept 8

well i have this is a portfolio margin account at IB after the record date will the stock open up down $8.50? and i will have to wait a week for the cash?

i am worried that WCRX will open down 8.50 on aug 31 but i i will not get paid until sept 8


this would be a huge problem as far as margin goes. because its a huge part of my portfolio.. any help would be greatly appreciated ....
 
here is the answer to my question....


WCRX Warner Chilcott

Pursuant to the rules of The NASDAQ Stock Market, when a dividend is declared in a per share amount that exceeds 25% of a company's stock price, the date on which that company's shares will begin to trade without the dividend, or ex-dividend, is the first business day following the payable date. The Company understands from NASDAQ that, because the $8.50 per share special cash dividend is expected to exceed 25% of the Company's share price, it will apply this rule and the ex-dividend date will be set by NASDAQ as September 9, 2010, the first business day following the payable date for the special cash dividend


i have never seen anything like this before

i hope it helps someone in the future
 
Quote from gimp570:

I own a boat load of WCRX they are paying a $8.50 cash dividend to shareholders on record aug. 30 payable sept 8

well i have this is a portfolio margin account at IB after the record date will the stock open up down $8.50? and i will have to wait a week for the cash?

i am worried that WCRX will open down 8.50 on aug 31 but i i will not get paid until sept 8

this would be a huge problem as far as margin goes. because its a huge part of my portfolio.. any help would be greatly appreciated
More...
Your account value doesn't drop because of the dividend so there should be no margin implications. IOW, the stock drops $8.50 on ex-div date but your account is immediately credited with a pending $8.50 dividend which you'll receive on the payment date.

AFAIK, the more relevant event is that you are incurring a taxable event as you are getting paid with your own money.
 
WCRX Warner Chilcott

Pursuant to the rules of The NASDAQ Stock Market, when a dividend is declared in a per share amount that exceeds 25% of a company's stock price, the date on which that company's shares will begin to trade without the dividend, or ex-dividend, is the first business day following the payable date. The Company understands from NASDAQ that, because the $8.50 per share special cash dividend is expected to exceed 25% of the Company's share price, it will apply this rule and the ex-dividend date will be set by NASDAQ as September 9, 2010, the first business day following the payable date for the special cash dividend



yes....thanks
 
Quote from spindr0:

Your account value doesn't drop because of the dividend so there should be no margin implications. IOW, the stock drops $8.50 on ex-div date but your account is immediately credited with a pending $8.50 dividend which you'll receive on the payment date.

AFAIK, the more relevant event is that you are incurring a taxable event as you are getting paid with your own money.
More...
It seems to be even worse than that - from the headlines I've just read it looks like the company is borrowing the money to pay this special dividend:

http://finance.yahoo.com/news/Warner-Chilcott-declares-apf-3034864148.html?x=0&.v=1

"Irish drug maker Warner Chilcott PLC said Friday it has completed a loan and a debt offering necessary to pay a special dividend of $8.50 per share that it announced last month.

The company amended its senior secured credit facilities to borrow an additional $1.5 billion in term loans.

Also Friday, it closed on its $750 million offering of 7.75 percent senior notes due 2018.

The dividend, payable to shareholders of record as of Aug. 30, will be paid on Sept 8. The cost of the dividend is about $2.14 billion."

I'm having trouble seeing the wisdom of borrowing money to pay a dividend - how does this benefit the company?
 
might seem like a bad idea but the stock is flying



Quote from GTS:

It seems to be even worse than that - from the headlines I've just read it looks like the company is borrowing the money to pay this special dividend:

http://finance.yahoo.com/news/Warner-Chilcott-declares-apf-3034864148.html?x=0&.v=1

"Irish drug maker Warner Chilcott PLC said Friday it has completed a loan and a debt offering necessary to pay a special dividend of $8.50 per share that it announced last month.

The company amended its senior secured credit facilities to borrow an additional $1.5 billion in term loans.

Also Friday, it closed on its $750 million offering of 7.75 percent senior notes due 2018.

The dividend, payable to shareholders of record as of Aug. 30, will be paid on Sept 8. The cost of the dividend is about $2.14 billion."

I'm having trouble seeing the wisdom of borrowing money to pay a dividend - how does this benefit the company?
More...
 
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