When investing in companies, it is good practice to know the dividend dates leading up to cash deposit in your account... you could say it makes you a more informed investor!
Here’s a typical example of how the dividend comes to be...
On August 28th after releasing financial results for the 3rd quarter, XYZ Financial’s Board of Directors declared a quarterly dividend payment of $0.63 per share. The dividend will be payable on October 29, 2012 to shareholders of record on October 2nd, 2012, with an dividend ex date of September 28th, 2012.
You may be thinking to yourself... “why should I care about these dates?” Although it is not absolutely necessary to know them as a long term investor, sometimes the market value of shares are temporarily affected by some of these dates (particularly the dividend ex date) which could be used to your advantage. You will see what I mean after reading the following.
The following is a series of articles explaining the various dividend pay dates mentioned in the example above... just click on the headings to access the articles.
This is the date when the dividend is announced to the public after being approved by the Board of Directors. It usually occurs along with the announcement of financial results.
This is the date on which purchasers of new shares are no longer entitled to the upcoming dividend payment. In other words... the cut-off date!
This is the date on which a company looks to see who is on their shareholder list and qualifies as shareholders of record for the upcoming dividend.
The date that the dividend is deposited in your account... the one you will care about the most!
Ok now that you’ve read through the above articles, I hope that you have a good understanding of the sequence of events leading up to the dividend deposit in your bank account. I also hope that you found them worth reading.