WCRX Warner Chilcott Special Dividend
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Quote from JamesJ:
is the expected fall really the whole 8.5$?
ummmm, if the dividend is $8.50 the stock drops like $8.50.
Taxes have no bearing on ex-dividend treatment.
i mean, is the us tax on such special dividends = 0 for investment banks and traders.
Like I'm a trader so that proves my point that the dividend IS free money!!!
Cause if not ie. if there's a 20% tax for example, you would expect the stock to drop only by 0.8*8.50 = 6.80$.
Time to check Dividends 101 Manual on that concept?
What happens if I don't pay taxes??? Will the stock drop more ???
well, if the dividend is just a regular dividend every thing is clear, and it will drop by +/- 8.50$.
i don't know about us tax laws.
i know that here in europe, for example in germany there is a special tax for this kind of corporate action.
so the stock is not dropping the whole dividend amount, since holders only get part of dividend, and rest goes to taxes (ie. 20%).
so the price after the pay out does reflect this. (which is logical due to no free lunch).
I reckon (judging from your response) there is no such special tax in the us.
i don't know about us tax laws.
i know that here in europe, for example in germany there is a special tax for this kind of corporate action.
so the stock is not dropping the whole dividend amount, since holders only get part of dividend, and rest goes to taxes (ie. 20%).
so the price after the pay out does reflect this. (which is logical due to no free lunch).
I reckon (judging from your response) there is no such special tax in the us.
Yes, it is a taxable event in the US and recipients will donate whatever bracket they're in but that's a separate issue from the corporate action which is simply a special cash dividend of $8.50 per share. On the ex date, the stock will drop $8.50 and the strike prices will be reduced by the same regardless of one's tax rate. There's certainly nothing special about more txes
Quote from spindr0:
Yes, it is a taxable event in the US and recipients will donate whatever bracket they're in but that's a separate issue from the corporate action which is simply a special cash dividend of $8.50 per share. On the ex date, the stock will drop $8.50 and the strike prices will be reduced by the same regardless of one's tax rate. There's certainly nothing special about more txes
Alright,
but there might be a tiny up-bias after the payout, as many indivuals may prefer selling before the ex date and buying back right afterwards in order to avoid being taxed the dividend.
And perhaps there's selling pressure as all who bot the stock for the dividend see that rise and lock in some gain?
Honestly, I don't know what historical statistical bias there is after a split or special dividend but my assumption is that the quality of earnings orsubsequent news would be the driving force.