Dividend Announcement

When a corporation’s board of directors announces an upcoming dividend payment on the company’s stock, the announcement includes the amount of the dividend and two dates. The record date is the date on which all shareholders are recorded, and investors owning stock on that date are entitled to receive the dividend. The payment date is the date the dividend is credited to the investors’ accounts or a check is sent out. The payment date is typically a few days to several weeks after the record date.

Stock Price Decrease

On the ex-dividend date, the share price of the dividend-paying stock decline by the amount of the dividend. For example, if the stock price closed the previous day at $50 and the dividend to be paid is $1, the shares will open trading at $49 on the ex-dividend date. This value change prevents traders from buying shares the day before the ex-dividend date to become shareholders of record and selling the next day, collecting the dividend by owning the stock for only one day.

Value to Shareholders

Shareholders who own the shares before the ex-dividend date do not have their investment value change on the ex-dividend date. The $50 value per share becomes a $49 share value plus the right to receive the $1 dividend. At some point in the future, the stock value will recover to the $50 level if other factors affecting the share price have not changed.

Reporting

References

More Like This

What Is Meant by Going Ex-Dividend?

How to Play The Ex Dividends Stock Market To Make a Nice Return

How to Sell Stock on Ex-Dividend Day

You May Also Like

For many stock investors, receiving regular dividends from their stocks are an important portion of the total return of these stock investments.

The term ex-dividend describes a very specific part of personal finance. Learn what is meant by going ex-dividend with help from a.

What Is an Ex-Dividend Date. Some corporations elect to share their profits with shareholders in the form of dividends. What Does.

Reinvesting dividends means to take the quarterly cash that comes from company earnings and put it back into additional shares. Companies encourage.

On the ex-dividend date, the share price will drop by the amount of the dividend; if you sell on the ex-dividend date.

The Meaning of Ex-Dividend Date. For many stock investors, receiving regular dividends from their stocks are an important portion of the total.

Buying stock before the ex-dividend date is easy as long as basic rules are. This does not mean you can buy.

Trade settlement does not confer risk;. Thus the settlement date must occur on or before the ex-dividend date in order for.

Do not assume a stock will go ex-dividend on a specific date without reading the specific dividend declaration. Related Searches. References. SEC.