Today in the history of the Indian stock market a company has announced a dividend of 19480% of its face value. No company would lavishly spend a humongous amount for its 25K shareholders. For a stock trading at near 1000 to distribute a dividend of 974. And to add to the eagerness the company even planned to distribute its cash reserve amounting to 103 crores.
But why should a company offer so much cash to the fractions? The private firm has decided to delist or terminate the business. But the dividend issued is guaranteed by the directors. The issuance takes a time of 10 days. Between that period, the share would decrease to an undesirable price and will make you sell in the loss. You can never think of the dividend paid would substitute the loss in price.
Dividends are taxed at 20% of the sum and 7.5% of other taxes which may amount to a loss of 25% of the invested amount. The right time to buy is before the ex-dividend date. Because the share price would have depleted and the dividends can easily carry away with any losses made after the trade.
- Ex-dividend date: 23/12/2020 ( Dividends are not valid when you buy them after this date ).
- Record date: 25/12/2020 ( Checking for eligibility)
- Earliest dividend payout: 30/12/2020 ( The date till which you hold the stock)
Before jumping for a buy, know what's behind the screen. Free lunch does not seem to be free always.
Dated 23/12/2020,
After the holders were declared with dividends the price collapsed from ₹985 to ₹12 with no delay (98.76%). To view the chart click here
Finbolts
Comments
Post a Comment