Dividend investing is a well-regarded passive earnings technique. Nonetheless, buyers shouldn’t be so passive that they’re unaware of crucial dividend dates. In the event you miss sure key dates, you may forgo the fitting to gather a dividend cost.
Get your calendar prepared, as you’ll undoubtedly need to mark down these must-know dates for knowledgeable dividend investors.
What Are the 4 Most Essential Dividend Dates?
The U.S. Securities and Change Fee (SEC) identifies four essential dividend dates that buyers ought to know:
The Declaration Date
So, let’s say you’re enthusiastic about buying XYZ inventory with a purpose to accumulate a dividend cost from Firm XYZ. The corporate’s board of administrators will declare a dividend (the greenback quantity, when it is going to be paid, and so on.) on – you guessed it – the declaration date.
This announcement can usually be discovered on the corporate’s investor relations web site. Therefore, as a potential investor in XYZ inventory, you’d need to test Firm XYZ’s web site repeatedly for updates.
2. The ex-dividend date
If Firm XYZ’s board declared a dividend on, let’s say, August 9, then the corporate may schedule the following vital date, the ex-dividend date, for August 16. It’s been stated that the ex-dividend date is crucial dividend-related date to know, so that you’ll undoubtedly need to mark it down.
You don’t must personal XYZ inventory on the declaration date to obtain the dividend cost from Firm XYZ. Nonetheless, you need to personal the inventory earlier than the ex-dividend date with a purpose to obtain the dividend cost. That date is “ex-” or with out dividend, that means you received’t get the dividend cost on or after that day.
You’d have to buy shares of XYZ inventory on or earlier than August 15 if XYZ Firm units the ex-dividend date for August 16. Shopping for the shares very first thing within the morning on the ex-dividend date received’t suffice.
3. The Document Date
One enterprise day after the ex-dividend date is the report date. Thus, if the ex-dividend date falls on a Friday, the report date can be on a Monday. Let’s say, for Firm XYZ, that the report date is August 17.
Did you purchase XYZ inventory earlier than the ex-dividend date and proceed to personal it on the ex-dividend date? Nice – now it’s time for Firm XYZ to test its report books and decide if, in truth, you owned shares of XYZ inventory earlier than and in the course of the ex-dividend date. In that case, then congratulate your self, as you’re eligible to obtain the dividend cost that was introduced on the declaration date.
Strictly talking, you don’t must personal the shares on the report date to obtain the dividend cost. It’s all in regards to the ex-dividend date, and that’s why it’s usually thought-about crucial of the 4 key dividend dates.
4. The Payable Date
Lastly, there’s the payable date, which is whenever you’d really obtain the dividend cost. These days, it’s usually deposited instantly as money within the shareholder’s funding account, although it may be mailed as a test.
Ready for the payable date would require some endurance, as it’d come a number of weeks after the report date. As an example, Firm XYZ’s payable date is perhaps September 7. The excellent news is that you just’d obtain the dividend cost on that day (or maybe just a few days later if it’s mailed as a test) even in case you didn’t personal XYZ inventory on the payable date (possibly you determined to promote your XYZ inventory shares someday after the ex-dividend date).
Know the Dates, and Get Able to Get Paid
The SEC observes that firms generally pay dividends within the type of inventory shares as an alternative of as money. In that case, the dividend-related procedures could also be totally different, so make sure you test with the dividend-paying firm for additional clarification on this.
In any occasion, understanding the essential dividend dates – and particularly the ex-dividend date – will assist make sure that you don’t miss out on any funds.
Now you’ve obtained some duties in your to-do listing: Examine the corporate’s investor relations web site, be taught crucial dividend dates, arrange reminders so that you don’t miss them, and naturally, make sure you personal some inventory shares so you possibly can start collecting those dividend payments.