dividend confusion

[Dux]

When a company posts a dividend for example 1 week from today is the date of record

Do you still have time to buy that stock?
I was under the assumption that you could if you did it three days before the record date.

How does the dividend affect the stock price?

I ask this because I saw a stock like the above example where the dividend was a large percentage of the stock price

[Dux]

the more I read the more confusing it is. The wikipedia says about everything I stated is true, BUT one of the respondents on another thread stated that most companies when they announce a dividend with a record date have arranged it so that you cannot purchase stocks before the date of record to ensure you had at least stocks for 1 previous quarter. Although this seems fair, it also seems a CONTRADICTION. What am I missing?

[aquaswim47]

The dividends are calculated by taking the amount of the dividend in dollars and cents divided by the total price of the stock.

You must buy the stock 3 business days before the record date; 2 days is ex-date and you don't get the dividend. The price of the stock falls by almost as much as the dividend after ex-date; dividend savvy investors are willing to pay slightly more for dividends.

Good luck. I hope your dividend-seeking works out.

[Dux]

Learning more all the time about dividends:

The Ex I was referring to is FNET. They stated they were going to vote on a dividend of 2.50 per share, stock was at 1.99 at the time. It has jumped to 2.91 now.

I crunched the numbers of total cash 26.45M divided by shares outstanding 11.04M and get a value of 2.39.

When we hit the ex div date, should the stock drop to 2.91 - 2.50? .41?? and the companies value be .41 X 11.04M or 5mil?

Any thoughts as to why liquidate so much?

[Stocktrading101]

Here is a link to the announcement,

FortuNet Declares a $2.50 Per Share Special Cash Dividend and Reports 2009 Annual Meeting Results, Election of Officers and Re-Appointment of Auditor - Yahoo! Finance

And ya that is really strange. How can a company worth $3.55 pay out a dividend of $2.50 per share.

I believe the stock price jumped so signficantly because of the dividend announcement. And when you look at the key stats for the company it only has FNET: Key Statistics for FortuNet, Inc. - Yahoo! Finance $26.45 million in cash, so basically it is paying out all its cash in a "special cash dividend"

My presumption is that after this dividend the stock is going to absolutely tank. Perhaps the insiders want to pull their money out of the company and take advantage of the capital gains on dividends versus selling their shares outright. Remember that after this year capital gains taxes are going to jump when Obama re-instates the Clinton taxes.

I would stay away from this stock....