Forum Archive Index - March 2000

[Chris Darby <darby@ak.planet.gen.nz>]

My experience is the same as noted below, ie. best to buy cum div not ex. 
 Although some investors may not want a dividend that is taxable 
prefering a non-taxable capital gain.  

Also important not to overlook the imputation credits(if any) attached to 
the dividend.  Assuming we are all taxpayers it is worth factoring the 
imputation credit into the equation.

eg. INL, closed Fri @ 985c, less 7c div and 3.5 imputation (985-10.5 = 
975.5), ex 2:1 split (975.5 divide by 3 = 325).  So $3.25 is the true ex 
price.  

<directbroking.co.nz> appear to be one of the few brokerages that take 
imputation credits into account when compiling their ex prices.  Their 
refurbished site is worth checking.

As for INL, watch it clamber upwards, slowly.  And this week keep an eye 
out for weakness in AIA cum a 15c div (incl imp).
   

>In yesterday's Star Times is an article quoting a study Ord Minnett have 
>carried out on 1,583 dividend payments between 1992 & 1999.Those share 
>prices on average fell ex dividend by only 60% of the dividend. A simple 
>strategy of buying cum div., and selling ex div. would have returned gain  
>of 1.4 - 1.9% per trade, less brokerage & tax. 86% of all such trades 
>would have been profitable.
>
>
>Regards
>
>Tony Haddon
>

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