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Ex-Dividend Date: The Dividend Earnings Catch

Dividends, dividends, dividends. Even if you don’t know what they are, it seems like you’d like them and want them because the name alone is good. It just so happens that dividends are quite good and profitable, and believe it or not, you can buy a stock for a short time, get the dividend, then sell the stock.

How Dividends Work

If you buy a stock that’s $50 a share, that stocks company rewards its shareholders with 6.0% dividend, and the shareholder owns 500 shares of stock, that shareholder just earned $1,500 for the whole year. BARE IN MIND (or should I say bull in mind ), dividends are paid quarterly. If you divide 1,500 by 4, that is how much one would make per quarter.

The Dividend Earnings Catch

Every stock has an ex-dividend date. As long as you buy the stock before that date and hold it until the ex-dividend date, then you will receive the dividend. Even if you sell on the ex-dividend date, you will still get the dividend money.

I LOVE getting that dividend money. It’s so great when you get handed that cash simply for owning a stock on a specific date. As a day/swing trader, it’s even more exciting when I don’t even know I own a stock during the ex-date and get surprised with a sweet dividend bonus.

However, I have heard the other side to this happy and simple money making story. Nothing that involves the stock market is ever quite that easy. I’ve been told to be careful before buying a stock on or right after the ex-date because the price typically drops a little to try and weed out anyone who attempts to buy dividends.

Dividends are truly supposed to be given to people who own a stock for the long term.

This drop doesn’t always happen but when it does, the stock price typically rebounds after the dividend drop, at which point you could sell your shares at a breakeven price and walk away with the dividend money.

Upcoming Ex-Dividend Dates

Here is a list of stocks with up-coming ex-dividend dates that I found from our friends over at StockerBlog (www.stockerblog.com). (P.S. I LOVE! StockerBlog. I just did an interview with them you may be interested in reading. I also encourage you to subscribe to their updates. Great stock resource!)