Regardless if you take a passive index ETF route, a mutual fund selection strategy or stock picking technique there are some important terms and ratios when you decide to invest. However, when you are dealing with dividend paying stocks there are dates whose definitions can be considered a term of art and you should know about.
Dividend Dates to Know
This is the day the Board of Directors states their intention to pay a dividend
This is the day in which any shares bought on this date or after do not receive the declared dividend. Even if you sold the stock after the Ex-Dividend date you will still receive the dividend. The stock is supposed to drop by an amount equal to the dividend paid, but I don’t believe this to really happen which is just another reason I love my perpetual income machine.
Those who own shares on or before the date of record will receive the dividend.
The day when the dividend is actually paid
Example of Dividend Dates in Action
If you head over to MorningStar and look up your stock of choice you can easily find all this information. For example if we were to look up a piece of my dividend portfolio, Chubb (CB) we would find:
These dates become more and more important when you decide to eventually turn on the income stream that you have eventually built.