As a dividend investor, you will be eagerly awaiting the dividend declaration date because it's when your dividend payment (and increase!) will be announced.
For most dividend paying companies, at the end of the quarter when financial results have been tabulated, the board of directors reviews the financials and approves the dividend payment... and the annual increase!
After approval, the dividends declared to the public on the declaration date. The ex dividend date and dividend payment dates are also announced at the same time. After the dividend is announced, the company also creates a liability on their books because that payment is now owed to its shareholders.
With the dividend achievers we’re after, this has been a long running tradition! They are accustomed to rewarding their shareholders with dividends and share buybacks and have been doing so for a very long time.
Here’s an example for you of how a typical company announces their dividend payment...
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 ex-dividend date of September 28th, 2012.
So the date in this case is August 28, 2012 and it’s first of the important dividend dates you should know about.
Why care about these dates? It is good practice to make yourself an informed investor and particularly with what goes on in your companies. As part owner in the business, wouldn’t you like to be aware of how the company is allocating its earnings?!
So there you have it... the declaration date is now under your belt and it’s time to keep learning... Good job!