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Shares keep coming and going fast FTSE 100 shares. The payments announced in the summer have come in slowly, or at least passed their old budget dates.
When a share becomes ex-dividend, it means that the company has declared a dividend, but the end date to qualify for that payment has passed. Investors who buy stocks behind or ex-dividend date has no right to claim future dividend.
Some of the UK’s biggest blue-chip stocks went dividend today. These are Centrica, Hargreaves Lansdowne, Smith & Nephew, The Weir Groupagain Phoenix Group Holdings.
Three more stocks from Footsie will join the old stocks club next week, on 10 October.
3 shares will be ex-dividend
These are:
| FTSE 100 stock | Share of each share | The type of dividend | Payment date | Return yield |
|---|---|---|---|---|
| Taylor Wimpey (LSE: TW.) | 4.8p | For a while | 15 November | 5.6% |
| WPP | 15p | For a while | 1 November | 4.9% |
| A kingfisher | 3.8 p | For a while | 15 November | 3.6% |
Investors who buy before these ex-dividend dates can receive dividends four to six weeks from now.
Buying before these closing dates is a popular idea for stock investors investing for income, as well as those following a ‘dividend capture strategy’. This investment concept involves buying a stock before the ex-dividend date in order to receive the dividend and selling immediately after.
But there is something important to remember here. On the day of the ex-dividend date, the company’s share price usually falls by about the amount of the dividend because new investors are not eligible to receive it.
So a stock that should pay a cash premium of 10p a share and close at 100p per share, for example, may open at 90p on the ex-dividend date. However, bear in mind that other factors (such as broader market conditions and company-specific news) may see it open above or below 90p.
Silly takeaway
It is my opinion that Taylor Wimpey could be the best dividend stock to consider today. This may not come as a surprise to regular readers who know that I hold in my Stocks and Shares ISA.
Not only does the housebuilder offer that massive 5.6% yield in 2024, but the expected cash reward per share of 9.64p in 2025 takes the yield to 5.8%. That’s up from the 9.38p forecast this year.
It is important to note that dividend coverage is very poor at this time however. In fact, this year’s forecast commission is higher than expected earnings of 8.07p per share. And the expected reward for 2025 is not just covered by the forecast earnings of 10.38p.
But signs of recovery in the UK housing market – combined with Taylor Wimpey’s strong balance sheet – give current dividend forecasts more credibility. The FTSE company also had a turnover of £584m as of June.
Given the bright long-term outlook of the real estate market, this could be a good source of income for years.
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