A quick note from the Markit News & Commentary team, concerning Dividends:
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Burberry Group plc
GB0031743007 (FTSE 100, STOXX Europe 600)
The company has published its planned payment
schedule for the upcoming interim dividend, with a provisional ex-dividend
date of December 23rd 2013.
This means that contrary to last year Burberry
shares will trade-ex dividend after the December expiry for derivative
contracts.
Any market participants rolling-forward last
year's timetable are likely to expect shares to trade ex-dividend before
the December expiry.
The provisional ex-date for next year's final
dividend is the 2nd of July 2014.
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Since non-Markit using market participants usually use last year's timetable as an estimate for future
dividend dates, this bit of news provides an arbitrage opportunity.
Burberry is current yielding only 1.83%, paying 29p on a price of 1,512.5p - so it might not be
extremely profitable, but it should be a riskless trade.
The method to tackle this would be in the following manner:
- Buy the December 2013 Burberry single stock future (pricing in the dividend payment will
undervalue the future price and thus it will be cheap)
- Short equivalent shares of Burberry stock
- Exit on expiration date
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