Dividend Date Frequently Asked Questions
Click on a question to see the answer.
Q: How do I qualify for a dividend?
Q: When do I need to buy a stock to receive a dividend?
Q: If I buy a stock on the record date, do I get the dividend?
Q: If I buy a stock on the ex-dividend date do I get the dividend?
Q: If I buy a stock in after hours trading on the day before the
ex-dividend date, do I get the dividend?
Q: If I buy a stock in pre-market trading on the ex-dividend date,
do I get the dividend?
Q: How long do I need to hold a stock to receive a dividend?
Q: Do I have to hold the stock through the record date to qualify
for a dividend?
Q: If I sell the stock before the ex-dividend date, do I get the
dividend?
Q: If I sell the stock on the ex-dividend date, do I get the
dividend?
Q: If I sell the stock after the ex-dividend date, do I get the
dividend?
Q: If I sell the stock before the payment date, do I get the
dividend?
Q: When can I sell a stock and keep the right to the dividend?
Q: What does declaration date mean?
Q: What does record date mean?
Q: What does ex-date mean?
Q: What does ex-dividend mean?
Q: Can a record date be on a weekend?
Q: Can an ex-dividend date be on a weekend?
Q: Is the settlement date the same as the record date?
Q: If the settlement date falls on the record date, will I get the
dividend?
Q: Why doesn't the company announce the ex-dividend date?
Q: When is the dividend amount deducted from the share price?
Q: Are dividends free money?
Q: What is a regular dividend?
Q: What is a normal dividend?
Q: What is a special dividend?
Q: Do all dividends follow the same rules?
Q: What is a deferred ex-date?
Q: How often are deferred ex-dates used?
Q: What is a conditional dividend?
Q: How often are conditional dividends declared?
Q: What is a due bill?
Q: What is the due bill settlement period?
Q: What is the due bill redemption date?
Q: When are due bills used?
Q: When will I receive my dividend?
Q: What is T+3?
Q: Does the three day settlement rule apply to record dates?
Q: Does the three day settlement rule apply to ex-dividend dates?
Q: Do I need to hold a stock for a full calandar quarter to qualify
for the full quarterly dividend?
Q: Are dividends prorated to how long I own the stock?
Q: If I own a stock for only a week, do I get only a portion of the
dividend?
Q: How many days are there between the ex-dividend date and the payment date?
Q: How many days are there between the record date and the
payment date?
Q: How many dividends does a company pay each year?
Q: Does the size of the dividend have anything to do with how
dividend dates work?
Q: Can I read the dividend rules from an official source?
How do I qualify for a dividend?
A: To qualify for a dividend you must buy the stock before the
ex-dividend date and hold the stock until at least the
ex-dividend date.
When do I need to buy a stock to receive a dividend?
A: To receive a dividend you must buy the stock before the
ex-dividend date and hold the stock until at least the
ex-dividend date.
If I buy a stock on the record date, do I get the dividend?
A: With normal dividends, no. In cases of a deferred ex-dividend
date, yes, as long as you continue to hold the stock until at
least the deferred ex-dividend date.
If I buy a stock on the ex-dividend date do I get the dividend?
A: No. You must buy the stock before the ex-dividend date and
hold until at least the ex-dividend date to receive the
dividend.
If I buy a stock in after hours trading on the day before the
ex-dividend date, do I get the dividend?
A: Yes, provided you hold the stock until at least the ex-dividend
date.
If I buy a stock in pre-market trading on the ex-dividend date,
do I get the dividend?
A: No. The ex-dividend date is the first day the stock trades
without the right to the dividend.
How long do I need to hold a stock to receive a dividend?
A: It does not matter how long you hold the stock as long as you
buy it before the ex-dividend date and do not sell it until at
least the ex-dividend date. That means you could buy it as
late as the day before the ex-dividend date and sell it on the
ex-date itself, for a holding period of only one day, although
there is usually no benefit in doing so.
Do I have to hold the stock through the record date to qualify
for a dividend?
A: No. A stock need be held only until the ex-dividend date to
qualify for the dividend. Buy the stock before the ex-dividend
date and sell it on or after the ex-dividend date and you will
qualify for the dividend.
If I sell the stock before the ex-dividend date, do I get the
dividend?
A: No. The ex-dividend date determines who gets the dividend.
Only the owners of the stock at the open of trading on the
ex-dividend date, including pre-market trading, get the
dividend. To be an owner of the stock at the opening of
trading on the ex-dividend date, you have to buy the stock
before the ex-dividend date.
If I sell the stock on the ex-dividend date, do I get the
dividend?
A: Provided you bought the stock before the ex-dividend date,
yes. You cannot buy the stock on the ex-dividend date and
sell it later that day and qualify for the dividend.
If I sell the stock after the ex-dividend date, do I get the
dividend?
A: Provided you bought the stock before the ex-dividend date,
yes.
If I sell the stock before the payment date, do I get the
dividend?
A: With normal dividends if you bought the stock before the
ex-dividend date and held until at least the ex-dividend date,
yes. But be aware that in cases of a deferred ex-dividend date
the payment date is one business day before the ex-dividend
date, so in such cases you would also be selling before the
ex-dividend date.
When can I sell a stock and keep the right to the dividend?
A: On the ex-dividend date or after.
What does declaration date mean?
A: The declaration date is the date the company declared
(announced) the dividend.
What does record date mean?
A: The record date is the day a buyer of a stock must be the
registered owner (also known as the owner of record) to
qualify to receive the dividend. Click here to read Owner vs.
Owner of Record: At What Point Do You Become The Owner
Of A Stock?
What does ex-date mean?
A: The ex-date is the first day on which a stock trades without the
right to receive the dividend. Ex-date is the same as
ex-dividend date.
What does ex-dividend mean?
A: Ex-dividend means the stock is trading without the right to the
upcoming dividend. The ex-dividend date is the first day on
which a stock trades without the right to receive the dividend.
Ex-dividend date is the same as ex-date.
Can a record date be on a weekend?
A: Yes. But in such cases the first business day before the record
date is used for determining the ex-dividend date, except in
the case of a deferred ex-date.
Can an ex-dividend date be on a weekend?
A: No. An ex-dividend date can only be on a regular business
day when the stock exchanges are open.
Is the settlement date the same as the record date?
A: For daily stock trading, yes. For purposes of qualifying for a
normal dividend, the two are the same only if the trade date
was three trading days previous.
If the settlement date falls on the record date, will I get the
dividend?
A: If the settlement date of a trade to buy the stock settles on the
record date and the dividend follows normal dividend rules,
yes, as long as you don't sell the stock until the day after you
bought it. If the dividend follows the rules necessitating a
deferred ex-date, you will get the dividend only if you hold the
stock until the deferred ex-dividend date.
Why doesn't the company announce the ex-dividend date?
A: Some companies do, though most don't. That's because it is the stock exchange, not the company, that determines
the ex-date.
When is the dividend amount deducted from the share price?
A: The dividend amount is not actually deducted from the share
price. Rather, traders in the stock, recognizing the reduced
net asset value of the company on the ex-dividend date, adjust
the price they are willing to pay for the stock or are willing to
sell the stock for on that day, the result most often being
down about the dividend amount, but there is no exchange
rule or requirement that such an adjustment be made.
However, on the ex-dividend date the exchange does reduce
the previous day's closing price quote and the stated price of
all outstanding orders to buy or sell the stock (unless placed
with a Do Not Reduce restriction) but that is not an obligation
for anyone to trade the stock at that reduced price. Click here
for a further explanation.
Are dividends free money?
A: No. On the ex-dividend date the stock price usually adjusts
down by about the amount of the dividend to reflect the
reduced net asset value of the company caused by the
obligation to pay the dividend. For a full explanation, click
here.
What is a regular dividend?
A: A regular dividend is one that is paid on a regular schedule,
though the amount may vary.
What is a normal dividend?
A: A normal dividend is one that follows normal dividend rules.
It may or may not be a regular dividend.
What is a special dividend?
A: A special dividend is one that is not regularly scheduled. It
may be in addition to regularly scheduled dividends or may be
a stand alone payout. Click here for a further explanation of
special dividends.
Do all dividends follow the same rules?
A: No. Dividends amounting to less than 25% of a company's
stock price follow normal dividend rules while dividends of
25% or more of a stock's price follow a different set of rules.
Click here for a further explanation of rules for dividends of
25% or more of a stock's trading price.
What is a deferred ex- dividend date?
A: A deferred ex-dividend date is one that falls on the first
business day after the payment date. Deferred ex-dividend
dates are used when a dividend payment is 25% or more of a
company's stock price or under certain circumstances with
conditional dividends. Click here for a further explanation of
deferred ex-dividend dates.
How often are deferred ex-dates used?
A: Deferred ex-dividend dates are used on less than 1% of all
dividends declared.
What is a conditional dividend?
A: A conditional dividend is a dividend contingent upon an event
or circumstance that has not yet happened at the time of
declaration. For example, a company may declare a dividend
contingent upon the sale of a subsidiary or other substantial
asset. In such a case, if the sale is ultimately not made, the
dividend contingent upon the sale would not be paid.
How often are conditional dividends declared?
A: Conditional dividends represent less than 1% of all dividends
declared.
What is a due bill?
A: A due bill is a statement of money owed. When a stock about
to pay a dividend is trading with a deferred ex-date, a due bill
is attached to any stock sold during the period encompassing
two days before the record date through the payment date,
obligating the seller to pay the dividend to the buyer at the
end of the due bill settlement period.
What is the due bill settlement period?
A: In cases of a deferred ex-dividend date, the due bill settlement
period is the three business days following the dividend
payment date. The due bill must be settled (paid) on the last
day of the due bill settlement period, which is known as the
due bill redemption date.
What is the due bill redemption date?
A: In cases of a deferred ex-dividend date, the due bill
redemption date is the day the shareholders of record who sell
their stock before the deferred ex-date must give up the
dividend to the buyers. It is the third business day after the
payment date, which is also the second business day after the
deferred ex-dividend date.
When are due bills used?
A: Concerning dividends, due bills are used in cases of a deferred
ex-dividend date.
When will I receive my dividend?
A: If you hold the stock in streetname with a brokerage house,
you will receive the dividend on the payment date or, in
certain circumstances with deferred ex-dividend dates, on the
due bill redemption date. If you hold the stock in certificate
form, the payment will be mailed to you on the payment date.
The exact timing of dividend payments by brokerage
houses varies - some credit accounts in the morning of the
payment date, some credit accounts near the end of the
payment date. It is not unusual for some brokerages to
credit dividends a day or more late, especially with dividends
on foreign stocks.
What is T+3?
A: T+3 (three day settlement) is the requirement that securities
transactions be settled in three business days, meaning the
securities delivered to the buyer and the payment delivered to
the seller.
Does the three day settlement rule apply to record dates?
A: Yes. With normal dividends, the ex-dividend date accounts
for the three day settlement period to become a shareholder of
record. (With deferred ex-dividend dates, it does not.)
Does the three day settlement rule apply to ex-dividend dates?
A: No. The three day settlement period (T+3) does not apply to
ex-dividend dates, as they are real-time dates -- buy before
the ex-date, you qualify for the dividend; buy on or after the
ex-date, you don't qualify for the dividend.
Do I need to hold a stock for a full calandar quarter to qualify
for the full quarterly dividend?
A: No. If you qualify for a dividend, you receive the entire
dividend no matter how long you owned the stock.
Are dividends prorated to how long I own the stock?
A: Normal dividends are never prorated. In rare circumstances a prorated dividend is declared but, like normal dividends, if you qualify for a prorated dividend, you receive the entire prorated
dividend no matter how long you owned the stock. Click here
for a further explanation of prorated dividends.
If I own a stock for only a week, do I get only a portion of the dividend?
A: No. Dividends are not prorated. If you qualify for a dividend,
you receive the entire dividend no matter how long you owned
the stock.
How many days are there between the ex-dividend date and the payment date?
A: With normal dividends the number of days between the
ex-dividend date and the payment date varies from company
to company, most often between one and six weeks, though
the period may be shorter or longer.
With dividends using a deferred ex-dividend date there are no
days between the ex-date and the payment date, due to the
payment date being the day immediately preceeding the
ex-date.
How many days are there between the record date and the
payment date?
A: The number of days between the record date and the payment
date varies from company to company, most often between
one and six weeks, though the period may be shorter or
longer.
How many dividends does a company pay each year?
A: There are no rules limiting the number of dividend payments
a company may make. The number of dividends paid each
year depends on the dividend policy of the paying company.
Four (every three months) is the most common, twelve
(monthly) is the next most common, followed by two and one.
Does the size of the dividend have anything to do with how
dividend dates work?
A: Yes. Dividends amounting to less than 25% of a stock's
trading price follow normal dividend rules, while dividends
representing 25% or more of a company's stock price follow a
different set of rules.
Can I read the dividend rules from an official source?
A: Yes. All of the confusion and misconceptions about dividend dates can be eliminated by sourcing the information directly
from the exchanges themselves, not from well-meaning but
misleading Websites. While all U.S. exchanges handle
dividends the same way, there are slight differences in the
wording. Here are the dividend rules from:
The
New
York Stock Exchange Listed
Company Manual.
Click This Line to Return to Dividends Are Not Free Money
Click Here To Read Owner vs. Owner Of Record:
At What Point Do You Become The Owner Of A Stock?
Click Here To Read What Are Special Dividends?
000001 TS @ BD +3
LOGIN |
||
| groupssa.com is a secure and personalized environment. Please provide your username and password. If you have forgotten your username or password, we can resend your login credentials to your email address. | ||
| * | ||
| * | ||
DEFINITIONS
Business
Day
A day on which the stock exchanges and
the banks, agencies & depositories for securities in New York State
are open
for business. Any day on which the stock exchanges are open but the
banks are closed is not counted as a business day for the purpose of
calculating dividend ex-dates.
Conditional Dividend/Distribution A dividend or distribution contingent upon an event or circumstance that has not yet happened at the time of declaration.
Declaration Date The date a dividend is declared by the company. The amount of the dividend is also declared except in some cases of a conditional dividend.
Deferred
Ex-Dividend Date
An ex-dividend
date that occurs
one business day after the payment date.
Distribution
The payment of cash or securities that are not part of a company's
earnings.
Dividend
A payment of earnings to shareholders.
Due Bill
A statement of money owed.
Ex-Dividend/Distribution Date The first day on which a stock trades without the right to receive the dividend/distribution.
Normal
Dividend/Distribution
A dividend/distribution amounting to less than 25% of a
company's stock price.
Owner
of record
The registered owner of a
security on
the Record Date.
Payment Date
The day the dividend payment
is
made.
Record Date The day a buyer of a stock must be the registered owner (owner of record) to receive a dividend.
Special Dividend A dividend that is not regularly scheduled.
T+3 Settlement
Rule
The requirement that securities transactions be settled in three
business
days. (Before June 7, 1995, securities transactions were settled in five business days.)