TCPC

What is the projected impact of the special dividend on the upcoming ex‑dividend date and short‑term trading activity?

Created August 07, 2025 at 12:14 PM

Projected impact of the $0.04 special dividend on the upcoming ex‑dividend date and short‑term trading activity

1. Mechanics of the ex‑dividend date

Date	What happens
Record date – shareholders on‑record at this date receive the dividend.
Ex‑dividend date – one business day before the record date (for a U.S.‑listed stock). Anyone who buys the stock on or after the ex‑date will NOT receive the dividend; the price of the stock is adjusted to reflect the dividend that will be paid.

Because BlackRock TCP Capital Corp. (NASDAQ: TCPC) is declaring a special dividend of $0.04 per share (in addition to the regular Q3 dividend of $0.25), the market will price‑adjust the share on the ex‑date for the total dividend that will be paid to the holder of record:

Total dividend that will be reflected in the price adjustment: $0.25 + $0.04 = $0.29 per share.

Thus, on the ex‑dividend date the share price is expected to drop by roughly $0.29 (or by the same percentage of the pre‑ex price). For a stock that is trading, for example, around $10, this is a ~2.9 % price adjustment.

2. Anticipated short‑term trading dynamics

Phase	Expected behavior	Rationale
Pre‑ex‑dividend (2‑3 days before)	Elevated buying pressure (dividend‑capture trades).	Investors who want to receive the dividend will buy the stock before the ex‑date, especially institutional dividend‑capture strategies. The $0.04 special dividend is modest, but the combined $0.29 payout still makes the capture worthwhile for short‑term traders.
Ex‑dividend date (day‑0)	Immediate price decline of ≈ $0.29, plus any market‑wide movement.	The price must reflect the fact that new buyers will not be entitled to the dividend. The drop is usually close to the dividend amount, though it can be slightly larger or smaller depending on overall market sentiment and liquidity.
Post‑ex‑dividend (1‑3 days after)	Potential sell‑off or stabilization.	Many dividend‑capture participants will unwind positions after the dividend is secured, creating a modest sell pressure. However, the special dividend is small ($0.04) and the regular dividend ($0.25) is already known, so the net effect is usually a short‑lived, modest dip rather than a prolonged decline.
Volume	Higher than average relative to the prior weeks.	The combination of dividend‑capture buying and subsequent unwinding typically leads to a noticeable spike in daily volume around the ex‑date.
Volatility	Mildly elevated (e.g., ↑ IV by 5‑10 bps).	The price adjustment and the “who‑gets‑the‑dividend” trade creates a temporary widening of the bid‑ask spread and a short‑term bump in implied volatility.

3. How the size of the special dividend shapes the impact

Factor	Effect
Dividend size relative to share price	At $0.04, the special dividend is ≈ 0.4 % of a $10‑share price—tiny on its own. Because it is bundled with the regular $0.25 dividend, the market treats the $0.29 total as the relevant adjustment. The special component therefore adds only a marginal extra downward pressure (≈ $0.04) beyond the regular dividend’s impact.
Signal of cash strength	Declaring a special dividend, even a modest one, signals that the company has excess cash after the quarter. This can soften the negative price reaction because investors view the payout as a sign of financial health, potentially offsetting some of the sell‑off.
Tax considerations	The special dividend is a qualified dividend for most U.S. investors, taxed at the ordinary dividend rate. The small amount means the tax impact is negligible, so it does not materially affect the decision to capture it.

4. Bottom‑line projection

Item	Expected outcome
Price adjustment on ex‑date	≈ $0.29 downward (≈ 2‑3 % for a $10‑share)
Pre‑ex buying pressure	Moderate increase in demand as dividend‑capture traders position.
Post‑ex selling pressure	Small, short‑lived sell‑off as those traders unwind.
Volume	Spike above the 10‑day average, likely 1.5‑2× higher.
Volatility	Slight uptick, but not enough to trigger large‑move alerts.
Overall market perception	The special dividend is a minor, positive signal of cash generation; it will not dramatically change the stock’s trajectory beyond the normal dividend‑related price adjustment.

5. Practical take‑aways for market participants

If you own TCPC shares before the ex‑date – you will receive the $0.04 special dividend (plus the $0.25 regular dividend).
If you are a short‑term trader – be prepared for a modest price dip on the ex‑date and a brief volume surge.
If you are a long‑term holder – the special dividend is a small cash return; the price adjustment is temporary, and the underlying fundamentals (net investment income of $0.32 per share) remain unchanged.
Watch the market reaction – because the special dividend is tiny, any price movement beyond the expected $0.29 adjustment will likely be driven by broader market factors rather than the dividend itself.

In summary, the $0.04 special dividend will cause a small, predictable price reduction on the ex‑dividend date, generate a modest bump in short‑term trading volume, and produce a brief, mild sell‑off after the ex‑date. The overall impact is limited, but the event will be closely watched by dividend‑capture traders and can add a short‑term liquidity boost to the stock.