Should I buy TechnologyOne shares before they trade ex-dividend on Thursday?

TechnologyOne shares will drop on Thursday. Should you buy before then?

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You might have seen TechnologyOne Ltd (ASX: TNE) shares pop up on your radar recently. This ASX 200 tech stock reported its latest earnings covering the half-year ending 31 March a week ago today. And they caused quite a stir upon their release.

As we covered last week, these earnings saw TechnologyOne report a 16% year-on-year rise in revenues to $244.8 million, as well as a 21% boost to the company's annual recurring revenue to $423.6 million.

This all helped TechnologyOne bring in $48 million in profits after tax, a 16% increase over the prior period.

As a result, TechnologyOne was able to deliver a record interim dividend of 5.08 cents per share, partially franked at 65%. That's a pleasing 10% hike over the 4.62 cents per share payout that shareholders enjoyed this time last year.

Since these earnings results were made public, TechnologyOne shares have exploded higher. The company was going for $16.02 a share on the day before these results came out. But today, those same shares are asking $17.93 each after hitting a new record high of $18.22 last Wednesday.

But this ASX 200 tech stock is due for a share price pullback this week. How do we know? Well, because TechnologyOne is scheduled to trade ex-dividend for this latest interim dividend this Thursday, 30 May.

Should we rush out and buy TechnologyOne shares before Thursday?

Yep, the ex-dividend date has been set for Thursday, which means that anyone who doesn't own TechnologyOne shares as of Wednesday's market close will not be eligible to receive said dividend. if one buys this company's shares from Thursday onwards, they will miss out on this latest payment.

As such, we should see a drop in the price of TechnologyOne shares on Thursday morning, reflecting this inherent loss of value.

So should you get in and secure some shares of this ASX 200 tech stock before then?

Well, probably not if you are just trying to grab a freebie. Buying a company's shares before or after they trade ex-dividends in order to secure a financial gain is usually a fool's errand. When a company trades ex-dividend, its share price normally falls by almost exactly what that dividend is worth.

Upon TechnologyOne's return to trade on Thursday, its share price is almost certainly just going to be 5.08 cents lower than where it otherwise would be trading.

So you can buy the more expensive shares on Wednesday and nab the rights to the dividend, or wait until the shares are a little cheaper on Thursday and miss out. In all likelihood, it will be a zero-sum game – two paths leading to the same financial endpoint.

As such, if you wish to invest in TechnologyOne as a long-term investment, it probably won't make a lick of difference whether you buy on Wednesday or Thursday.

ASX brokers say buy

On that note, many ASX experts are telling investors to consider buying TechnologyOne shares in light of its recent results.

Last week, we covered the views of ASX broker Bell Potter. Bell Potter slapped TechnologyOne with a buy rating. That was alongside a 12-month share price target of $19.

We also took stock of what another broker in Morgans had to say. Morgans was also delighted by TechnologyOne's results. It gave the tech stock an 'add' rating, as well as a share price target of $20.50.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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