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Beginner3 min readDividends and Corporate Actions · 1/9

Cash Dividends: From Announcement to Payment

A dividend does not reach you on the day the company announces it. Between the announcement and the money landing in your account there are several stops, and each one means something.

What you will learn

  • Know the stops a dividend passes through, in order.
  • Read a dividend disclosure and pull out the numbers that matter.
  • See why a stock can trade lower after the last session for the right.
The lesson as a short video · 20 seconds · Watch on YouTube
In this lesson
  1. What is a dividend?
  2. Four stops, in order
  3. A worked example
  4. Why the price can drop afterwards
  5. Check yourself
  6. Summary
  7. Related terms

What is a dividend?

When a company makes a profit, it may decide to pay part of it in cash to its shareholders. The amount is set per share and is often called a coupon in Egypt. Your share is the amount per share times the number of your entitled shares.

Four stops, in order

1AnnouncementA notice with the amount and the payment date
2Last session with the rightWhoever buys by its close gets the dividend
3Trading without the rightBuyers from here do not get this dividend
4PaymentThe cash becomes available to entitled holders
The second stop is the one that matters to you: it decides who gets the dividend.
  1. AnnouncementA notice is published on the exchange with the coupon number, the amount per share and the date payment starts.
  2. Last session with the rightThe same notice says the right to the dividend passes to buyers up to the end of a named session. Anyone who buys by then gets it.
  3. Trading without the rightFrom the next session, a buyer does not get this dividend; it stays with whoever owned the share before.
  4. PaymentFrom the payment date the cash is available. It can reach your bank account, come through your custodian if you agreed on that, or through other routes offered by Misr for Central Clearing.

A worked example

ExampleAn invented company, Nile Industries, announces a dividend of EGP 1.50 per share. You hold 400 shares bought well before the last session with the right. Your share = 400 × 1.50 = 600 EGP before any deductions. If you buy 100 more shares after that session, those 100 carry no share of this dividend.

Why the price can drop afterwards

The company is paying cash out to shareholders, so it is logical for the market to value the share lower afterwards, roughly by the dividend. That is why buying just before the last session only to collect the dividend is not a guaranteed gain. And the amount you receive can be below the gross because of taxes.

Watch outDo not work out the last session for the right yourself from the payment date. Read the line in the notice that says up to the end of which session; that is what decides it.

See upcoming dividends

Open the corporate actions page and look at an upcoming dividend: its amount per share, its last session with the right, and its payment date.

Corporate actionsDisclosures

Check yourself

1. Which stop decides who gets the dividend?

Buyers up to the end of that session get the dividend; later buyers do not.

2. A 0.80 dividend and 500 entitled shares. Your share before deductions?

500 × 0.80 = EGP 400.

Summary

  • A dividend goes from announcement, to the last session with the right, to trading without it, to payment.
  • The last session with the right is written in the notice itself, and it decides who gets paid.
  • The price can fall afterwards by roughly the dividend, so the dividend is not free money.

Related terms

DividendEPS

Related lessons

Dividends and Corporate ActionsDividend Yield: How Is It Calculated?Trading on the Egyptian ExchangeSettlement in Egypt: T+0, T+1 and T+2
Previous · 11Relative Valuation: How to Compare a Company with Its PeersNext · 02The Entitlement Date: Who Gets the Dividend?

Educational content only, not investment advice. Companies and figures in the examples are invented for illustration.