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Re: large stable dividend stocks vs diversified funds
Old 08-23-2006, 06:15 PM   #61
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Re: large stable dividend stocks vs diversified funds

its still what i said...the price drops by the amount of the dividend...thats published information on every brokerage website .......i dont buy individual dividend paying stocks so i have never personally tracked it but as evidence that everything you read about dividends doing this track it thru yourself...that will confirm it is in deed as explained .
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Re: large stable dividend stocks vs diversified funds
Old 08-23-2006, 06:17 PM   #62
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Re: large stable dividend stocks vs diversified funds

nords your confusing the days market action with the sole effect of the dividend payment when combined.........a stock can rise on the day after it goes ex-dividend..it would be just that much higher by the amount of the dividend paid out if it didnt pay one
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Re: large stable dividend stocks vs diversified funds
Old 08-23-2006, 06:41 PM   #63
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Re: large stable dividend stocks vs diversified funds

just for the heck of it i took a look at altria....there really is no way we can proof this out...looking at days when there is no dividend paid the close and the open vary already so on the days the dividends are subtracted out you cant tell how much is the bids that are in and how much is the dividends paid.......
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Re: large stable dividend stocks vs diversified funds
Old 08-24-2006, 08:57 AM   #64
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Re: large stable dividend stocks vs diversified funds

It still doesn't follow what we see happening.
Here is another example:

Citibank is paying their dividend tomorrow. The dividend is currently 4% or 49 cents per quarter.

So according to Mathjak107 the stock will take a $0.49 hit tomorrow when they pay their $0.49 dividend?

If so, this should be easy to spot as it is very rare for Citibank to move that much in a day.
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Re: large stable dividend stocks vs diversified funds
Old 08-24-2006, 09:05 AM   #65
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Re: large stable dividend stocks vs diversified funds

Quote:
Originally Posted by Zathras
It still doesn't follow what we see happening.
Here is another example:

Citibank is paying their dividend tomorrow.* The dividend is currently 4% or 49 cents per quarter.

So according to Mathjak107 the stock will take a $0.49 hit tomorrow when they pay their $0.49 dividend?*

If so, this should be easy to spot as it is very rare for Citibank to move that much in a day.
You;ve got the right idea, but the wrong date. citi would have adjusted downward by $.49 on the ex-div date, not the payment date.
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Re: large stable dividend stocks vs diversified funds
Old 08-24-2006, 09:27 AM   #66
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Re: large stable dividend stocks vs diversified funds

My bad, thanks for the correction.

Citibank may not be as clear cut as I was thinking. 49 cents is not that unusual. However, we should be able to find a stock that has a dividend larger than it's standard dayly range?
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Re: large stable dividend stocks vs diversified funds
Old 08-24-2006, 09:35 AM   #67
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Re: large stable dividend stocks vs diversified funds

Quote:
Originally Posted by Zathras
My bad, thanks for the correction.

Citibank may not be as clear cut as I was thinking.* 49 cents is not that unusual.* However, we should be able to find a stock that has a dividend larger than it's standard dayly range?
Easy. Look at TOPT when they went ex-div for the mammoth special dividend they paid out wthin the last year.
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Re: large stable dividend stocks vs diversified funds
Old 08-24-2006, 06:18 PM   #68
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Re: large stable dividend stocks vs diversified funds

the problem is the normal market action covers up the dividend payment and its not easy to document the days move.i cant find anyway for someone to proof this out* other than just call the companies share holder department and ask them what effect the dividend had on the share price...even the from the nights close to the mornings open on days with no dividend the price is different .....the fact is every brokerage and financial site echoes everything fidelity's website does when they explain dividends and market orders so we have to believe thats how the system works,they all cant be fibbing to us.....
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Re: large stable dividend stocks vs diversified funds
Old 08-24-2006, 07:02 PM   #69
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Re: large stable dividend stocks vs diversified funds

They aren't I think you are mis-interpreting and they have worded it poorly.

For example, IF there is some sort of automatic adjustment to the stock price you would never see the hi-low range during the ex date less than the amount of the dividend, right?

While I could see day traders automatically adjusting for the ex date, I don't think it really affects anyone else. All the activity is market/trader based, not any automatic adjustment.

For example, Aug 3rd was Citibanks last ex date. The dividend was $0.49. The high for the day was $48.60, the low $48.20. If the dividend 'adjustment' took place on the market day the math simply doesn't add up. The span from high to low is less than the amount of the dividend.

However, even if this were not the case, it seems that the adjustment is negligable. The return over time of dividend stocks is very good. The stability and extra income is very attractive to many people.
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Re: large stable dividend stocks vs diversified funds
Old 08-24-2006, 10:18 PM   #70
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Re: large stable dividend stocks vs diversified funds

Quote:
Originally Posted by Zathras
For example, IF there is some sort of automatic adjustment to the stock price you would never see the hi-low range during the ex date less than the amount of the dividend, right?

For example, Aug 3rd was Citibanks last ex date. The dividend was $0.49. The high for the day was $48.60, the low $48.20. If the dividend 'adjustment' took place on the market day the math simply doesn't add up. The span from high to low is less than the amount of the dividend.
The 'adjustment' takes place on commercial data feeds about an hour before market open.
On Aug 2 C closed at $48.72. At around midnight all of the stats (hi, lo, volume, etc) are
cleared out and the close is moved to the "yesterdays close" field. About an hour before
market trading begins the dividend adjustment occurs and the "yesterdays close" field
jumps back to $48.23. C then proceeded to open at $48.24.
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 03:15 AM   #71
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Re: large stable dividend stocks vs diversified funds

Quote:
Originally Posted by CyclingInvestor
The 'adjustment' takes place on commercial data feeds about an hour before market open.
On Aug 2 C closed at $48.72. At around midnight all of the stats (hi, lo, volume, etc) are
cleared out and the close is moved to the "yesterdays close" field. About an hour before
market trading begins the dividend adjustment occurs and the "yesterdays close" field
jumps back to $48.23. C then proceeded to open at $48.24.

so then yes it did automatically drop the .49 dividend ?
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 07:34 AM   #72
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Re: large stable dividend stocks vs diversified funds

That would seem to fit.
Where can I look up opening costs for a given day, I would like to try a few other stocks.
I am still lean towards market action adjusting, however this case seems to follow the pattern of a correction by the dividend amount.
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 07:41 AM   #73
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Re: large stable dividend stocks vs diversified funds

Quote:
Originally Posted by Zathras
That would seem to fit.
Where can I look up opening costs for a given day, I would like to try a few other stocks.
I am still lean towards market action adjusting, however this case seems to follow the pattern of a correction by the dividend amount.
If you pull up historical prices on Yahoo Finance, I believe that you can get opening and closing prices.

I think the adjustment is reakky the market reacting to ex-divs, but it has become so ingrained that the pricing services automatically do it now.
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 07:52 AM   #74
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Re: large stable dividend stocks vs diversified funds

I'm pretty sure mathjak is right.* It is what I have observed.* As noted by brewer it happens on the ex-div date, not the payment date.* And it's not exact, but it's usually close to the dividend amount.

The cited example of EGLE did close at 15.43 and then re-opened at 14.95.* Historic prices at this link:
http://finance.yahoo.com/q/hp?s=EGLE...=10&f=2006&g=d

I have 30+ dividend stocks and I know I've seen it with the others as well. Whether it is market forces or market makers changing it, I do not know.
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 08:11 AM   #75
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Re: large stable dividend stocks vs diversified funds

I still think it is market activity that causes this as if it was a mechanism it would always happen. It may always happen, I just need to see a few more examples

JNJ has their ex date today. They closed at $65.00 yesterday, we will just see where they open. The high was $65.13 so there was no apparent $0.375 adjustment yet.

Wether this happens or not though, I still prefer a large diversified portfolio WITH a good number of dividend paying stocks (best of both worlds). If this does happen as Math indicates, the market seems to absorb these corrections much faster than you could recoup from liquidating the dividend amount. Not sure why if Math is correct, but historically it seems to happen.
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 08:39 AM   #76
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Re: large stable dividend stocks vs diversified funds

Well, looks like I will eat my words

While the opening price is shown as $64.73 (which would only be 27 cents) the price is showing $64.74 UP 12 cents. That would be up 12 cents from $64.62 which is yesterdays close - the dividend amount(37.5 cents).

While this possibly could be market movement, it is awefully exact. In either event though, the correction is there, although it quickly gets 'absorbed'.

Thanks for teaching me something new Math
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 02:15 PM   #77
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Re: large stable dividend stocks vs diversified funds

While we've all noted some very interesting market behavior, there's nothing to document whether it's caused by investor psychology & market arbitrage or by exchange rules.

Until we can find the exchange rule that sets those prices, I'm not convinced that prices are required to be adjusted for dividends.

Everything that we've observed can be explained by market makers adjusting their prices to match the dividends, but that doesn't tell us whether they do so because of an exchange rule or if they do it just because that's the way they've learned works best.

Let me reiterate, Mathjak, that you still haven't backed up your claims with a rulebook or any other reference. The quoted study is just another research attempt to decide if stock prices are affected by dividends, and those guys didn't quote a rule on the prices-- only on the stop loss orders.

I haven't found anything to support your claims either, but I'm not the guy that made those claims as if they were a stone-cold fact.
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 02:30 PM   #78
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Re: large stable dividend stocks vs diversified funds

I haven't really been following this thread, but here's a paper that talks about stock prices on ex-dividend day:

Buying the Dividend

The behavior of share prices around ex-dividend days has been the subject of extensive theoretical and empirical research for nearly 50 years. Prior empirical studies consistently document that, on average, share prices decline on the ex-dividend day by less than the dividend amount.

Regarding exchange rules:

... finds that abnormal ex-day returns are induced by NYSE Rule 118 and AMEX Rule 132, which dictate that specialists must adjust all open limit buy orders by the amount of the dividend and round down to the next tick if necessary.
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 05:45 PM   #79
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Re: large stable dividend stocks vs diversified funds

im tired of beating this dead horse...last posting im doing on this topic so heres some more documentation

"

(NYSE) Rule 118 and American Stock Exchange (AMEX) Rule 132, which dictate how open ("good-till-canceled") limit orders to buy and sell stock are handled on ex-days. On both exchanges, open limit orders to buy stock must be reduced by the cash dividend amount on ex-cash dividend days. If the resulting price is not a multiple of an eighth of a dollar, then an ex-cash dividend limit buy order price is reduced to the next lower eighth. Limit orders to sell are not changed by the ex-cash dividend event.(5) In addition, patterns in ex-day abnormal returns are shown to arise because trading is done at discrete price intervals (normally $1/8 for stocks selling above one dollar per share), while cash and stock dividends paid per share are usually not multiples of eighths.

On ex-stock distribution days, NYSE Rule 118 and AMEX Rule 132 require a specialist to reduce all outstanding limit buy orders. The new limit order price equals the original limit order price divided by 100% plus the percentage value of the stock distribution. For example, a limit order price will be divided by 101% when there is a one percent stock dividend. If the resulting price is not a multiple of an eighth of a dollar, then the limit buy price is reduced to the next lower eighth. Outstanding limit sell orders for NYSE stocks are not reduced; however, AMEX limit sell order prices are reduced by 100% plus the percentage value of the stock distribution, and rounded down if necessary, when a stock trades ex-distribution

case closed..if you think your getting something extra when you get a dividend that you didnt have before the dividend then keep believing it .*
if you believe the dividend is just a wash ,nothing gained or lost from the dividend payment its self then you are correct....there may be associated action in the market related to the dividend payment moving the stock up or down but thats not what we are refering to in this discussion..

its the dropping of all the offers by the dividend amount that translates into the stock price dropping by the dividend amount......
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Re: large stable dividend stocks vs diversified funds
Old 08-25-2006, 05:48 PM   #80
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Re: large stable dividend stocks vs diversified funds

only thing i didnt know is on the nyse limit orders to sell arent reduced but on the amex they are......buy orders are reduced on both....
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