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The dividends came hefty and rapid FTSE100 shares. Payments announced over the summer have been steadily arriving, or at least exceeding the dividend dates.
When a stock becomes ex-dividend, it means that the company has declared a dividend, but the deadline for eligibility for this payment has passed. Investors who buy shares on or after ex-dividend date, are not entitled to claim future dividends.
Some of the UK’s biggest blue-chip shares went ex-dividend today. These are Centric, Hargreaves Lansdown, Smith and nephew, Weir GroupAND Feniks Group Holding companies.
A further three Footsie companies will also join the ex-dividend club next week, on October 10.
Three stocks will soon go ex-dividend
These are:
| FTSE100 shares | Dividend per share | Type of dividend | Payment date | Dividend rate |
|---|---|---|---|---|
| Taylor Wimpey (LSE:TW.) | 4.8p | Transition period | November 15 | 5.6% |
| WPP | 15:00 | Transition period | November 1st | 4.9% |
| Kingfisher | 3.8p | Transition period | November 15 | 3.6% |
Investors who purchase before the ex-dividend dates will be able to receive their dividend in approximately four to six weeks.
Buying ahead of these deadlines is a popular idea among stock investors who invest for income and among those who employ a “dividend capture strategy.” This investing concept involves purchasing shares before the ex-dividend date to claim the dividend and then selling it shortly after.
But there’s an crucial thing to remember here. On the ex-dividend date, the company’s stock price usually falls by about the amount of the dividend because recent investors are not eligible to receive it.
For example, a stock that is expected to pay 10p per share and closes at 100p per share may open at 90p on its ex-dividend date. However, please be aware that other factors (such as broader market conditions and company-specific news) may cause the stock to open above or below 90p.
Stupid takeaways
In my opinion, Taylor Wimpey could be a great dividend stock to consider today. This may come as no surprise to regular readers who know that I own it in my Stocks and Shares ISA.
Not only is the homebuilder offering such a robust dividend yield of 5.6% for 2024, but expectations for a higher cash reward of 9.64p per share in 2025 push the yield to a substantial 5.8% . This is up from the forecast 9.38p this year.
However, it should be noted that dividend coverage during this period is quite destitute. In fact, this year’s forecast dividend is higher than expected earnings of 8.07 pence per share. The projected 2025 reward barely matches projected earnings of 10.38p.
However, signs of recovery in the UK housing market – combined with Taylor Wimpey’s robust balance sheet – give grave credence to current dividend forecasts. As of June, FTSE also had net cash of £584m.
Given the good long-term prospects for the housing market, this could be a great share of passive income for years to come.
