April, May, June… France is in full swing dividend season. CAC 40 companies are thus distributing several tens of billions of euros for the 2024 financial year, and the vast majority of secondments are concentrated between April and July, after the annual general meetings have been held. For individual shareholders, this is the period when the coupon falls on the securities account or the PEA. And this timing may raise a question among individuals, especially those who are just starting out: how long must you have kept the stock in your portfolio to be entitled to the payment?
Many people imagine that it must be held for the entire calendar year, or at least for several months, to obtain this right. This is false: the rule is in reality much more flexible. Just one day is enough to receive a dividend, provided that it is the day of the detachmentalso called ex-date in stock market jargon. “You must have the share on the evening of the day before the detachment to benefit from the dividend”assures us Andrea Tueni, market expert at Saxo Banque.
Do not confuse detachment date and payment date
“If the ex-date is the 20th, you must have purchased the stock the day before the market closes, on the 19th, that is to say before 5:30 p.m. for French stocks »summarizes Andrea Tueni. One day in the hands of the investor, and the coupon is acquired, even if he resells the share the next morning. Then comes the “record date”generally the next day, which corresponds to the administrative termination of the positions by the central depository.
Finally, comes the date of payment, when the coupon actually arrives in the cash account. “Often, clients less familiar with the process wonder why they are not paid the same day, when they see the posting date mentioned in the press”adds Andrea Tueni. This therefore comes from the difference between the detachment date and the payment date. It generally occurs one to three working days after posting.
Why the share price mechanically drops on D-day
On the day of detachment, the share price automatically falls by an amount equivalent to the dividend paid. This is normal: the value of the dividend has indeed been “detached” from the price. Once the coupon is detached, the cash leaves the company for join the pocket of shareholders. The company distributes part of its value, the valuation of the stock naturally reflects this. In practice: if the share was worth 50 euros and the dividend is 2 euros, it is theoretically supposed to open at 48 euros on the day of the detachment.
Direct consequence for individuals: there is nothing to be gained by buying the day before to resell the next day. “Buying the day before and reselling the day of detachment will not bring much, confirms Andrea Tueni, because the mechanical drop in price compensates for the dividend received. » You will receive the 2 euros dividend, but your share will have lost around 2 euros in value. The balance is zero… not counting the brokerage fees and taxes which eat into the transaction.
This mechanism also explains the sometimes visible gap between the price of the CAC 40 and that of its futures contract. “Sometimes, clients wonder why there is a gap between the price of the CAC 40, which is a non-tradable cash index, and the future contract. It is a gap which is defined by the detachment of dividends”specifies Andrea Tueni. The CAC 40 in its most publicized version is a price index which does not reintegrate dividends: each time it is detached, it drops a little.
