Advertisement
investing

What You Must Know About a Stock's Dividend Date

Timing is everything when it comes to collecting on dividend-paying stocks.

In today’s low-interest-rate environment, investors can’t seem to get enough high-yielding dividend stocks. But pay close attention to a company’s payment schedule. Otherwise, you could miss out on collecting a dividend you believe you’re entitled to.

The critical deadline to mark on your calendar is a firm’s “ex-dividend” date (available on websites such as Yahoo Finance and in the investor-relations section of a company’s website). If you own shares before that date, you’ll lock in the next payment. But investors who buy on or just after the ex-date give up the rights to the next dividend payment.

Advertisement - Article continues below

To see how this works, consider General Electric’s payment schedule. The company announced on June 10 that it would pay a dividend on July 25 to shareholders “of record” as of June 20. To be eligible for the dividend, investors had to own shares before the stock’s ex-dividend date of June 16. The ex-date always lands two business days before the record date. In this case, the record date fell on a Monday, which pushed the ex-date back to Thursday, June 16. Buying GE anytime before the market closed on June 15, even in the final second of trading, would entitle you to its next dividend.

Advertisement
Advertisement - Article continues below

Purchasing the stock on or just after the ex-date would disqualify you from the payment. That can sting, especially if it’s a high-yielding stock, such as an electric utility or a telecom company. Many of these stocks yield more than 4%, so missing a payment could leave a hefty amount of income on the table. Moreover, companies often make their dividend payment several weeks after the ex-date. That’s also a danger zone because buying shares at any point in that stretch would still leave you off the company books as a “shareholder of record” entitled to receive the next dividend.

One other caveat: Be aware of how a stock can trade on the ex-date. Typically, shares open lower by roughly the amount of the upcoming dividend. Buying on that day may get you a lower price, but you will typically have to wait about three months before you collect the next disbursement.

If you’re interested in a dividend stock, first check the date of the next payment. Buy shares before the stock goes ex-dividend the next time. Also note that if you sell shares after the ex-date, you’ll still collect the upcoming payment. Either way, make sure to stay on the receiving end of the dividend income line.

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census
Politics

17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census

Every 10 years, the 435 seats in the House of Representatives are reassigned based on the results of the U.S.
July 2, 2020

Recommended

13 Dividend Stocks That Have Paid Investors for 100+ Years
stocks

13 Dividend Stocks That Have Paid Investors for 100+ Years

Here are 13 dividend stocks that each boast a rich history of uninterrupted payouts to shareholders that stretch back at least a century.
May 21, 2020
20 Dividend Stocks to Fund 20 Years of Retirement
stocks

20 Dividend Stocks to Fund 20 Years of Retirement

These 20 high-quality dividend stocks yield roughly 4% or higher and should grow their payouts even more -- a powerful 1-2 combo for retirement income…
March 9, 2020
Closing Bell 7/6/20: U.S. Stocks Grab the Baton From China
Markets

Closing Bell 7/6/20: U.S. Stocks Grab the Baton From China

A surge in Chinese equities, as well as a massive improvement in services-sector data, lifted U.S. stocks and sent the Nasdaq to new highs Monday.
July 6, 2020
The Kiplinger Dividend 15
dividend stocks

The Kiplinger Dividend 15

These 15 dividend stock picks, satisfying income investing needs of every kind, have so far kept their payouts intact while many big firms have cut ba…
July 6, 2020