Image source: Getty Images
Dividends have continued to come thick and fast since FTSE 100 actions. The payments announced over the summer have been coming in steadily, or at least exceeding their ex-dividend dates.
When a stock becomes ex-dividend, it means that the company has declared a dividend, but the deadline to be eligible for that payment has passed. Investors buying shares. in or after the ex-dividend date do not have the right to claim the next dividend.
Some of the UK's biggest blue-chip stocks have become ex-dividend today. These are Central, Hargreaves Lansdown, Blacksmith and nephew, landfill groupand Phoenix Group Holdings.
Three more Footsie shares will also join the ex-dividend club next week, on October 10.
The 3 stocks about to go out without a dividend
These are:
| FTSE 100 shares | Dividend per share | Dividend type | payment date | Dividend yield |
|---|---|---|---|---|
| Taylor Wimpey (LSE:TW.) | 4.8p | Provisional | November 15 | 5.6% |
| WPP | 15p | Provisional | November 1 | 4.9% |
| Kingfisher | 3.8p | Provisional | November 15 | 3.6% |
Investors who purchase before these ex-dividend dates will be able to earn a dividend four to six weeks from now.
Buying before these deadlines is a popular idea among stock investors who invest for income and for those who follow the “dividend capture strategy.” This investing concept involves purchasing a stock before the ex-dividend date to claim the dividend and then selling it shortly after.
But there is something important to remember here. On the ex-dividend date, a company's stock price typically falls by approximately the amount of the dividend because new investors are not eligible to receive it.
So a stock that is due to pay a cash reward of 10p per share and closes at 100p per share, for example, might open at 90p on the ex-dividend date. However, note that other factors (such as broader market conditions and company-specific news) could cause it to open above or below 90p.
A silly takeaway
In my opinion, Taylor Wimpey could be a great dividend stock to consider today. This may not come as a surprise to regular readers who know that I hold it in my stocks and Shares ISA.
Not only is the housebuilder offering that huge 5.6% dividend yield for 2024, but expectations of a higher cash reward of 9.64 pence per share for 2025 push the yield to a substantial 5.8%. That's up from the 9.38p forecast for this year.
However, it is important to note that dividend coverage is quite poor for the period. In fact, this year's expected dividend is higher than expected earnings of 8.07 pence per share. And the expected 2025 reward is barely covered by the expected earnings of 10.38 pence.
But signs of recovery in the UK property market, combined with Taylor Wimpey's strong balance sheet, give great credence to the current dividend forecasts. The FTSE firm also had net cash of £584m in June.
Given the bright long-term prospects for the real estate market, this could be a great share of passive income for years.
