Sunday, February 23, 2020

Dividend Terminology

   This post is a continuation of the $50 a month stock challenge I started October 14, 2019.  Click on, "No Commission Stock Trades", on the right side of the page to read from the start.

  In response to an e-mail question about the  "dividend terminology" that I use on this blog series.

     I will try to make it understandable even if I state some very obvious things. Remember, I have to assume you do not know how the whole dividend process works.

     First things first, not all companies pay a dividend, the "board of directors" makes that decision. If they decide to pay a dividend the following terms apply.

Ownership Date
Projected Dividend-Date
Captured Dividend

Announcement = A companies board will meet and an announcement will be made in a "company press release" and it will include the necessary dividend information. Dividends can be, Special or one time, Monthly, Quarterly, Semi-annually, or Annually. That will be spelled out in the news release. They may also announce more than one upcoming dividend payments and give those amounts and dates and eliminate future "press releases" covering that future dividends.

Example =
this example does not show ex-date and I will explain when I talk about ex-dates.

Amount = in this example NOC as declared a "quarterly dividend" of $1.32.

Ex-Date = ex-date is important to the investor because we have to own it before that date AND on that date to collect the dividend. Most of the time it is included in the press release but it does not have to be

Ownership-Date is what the company goes by to pay the dividend and "Ex-Date" is the date the investor "must buy before and hold until" to actually own  the stock on "ownership date".
When you buy a stock it is escrow (for lack of a better word) until "settlement date", you can sell it but your actual ownership does not happen until "settlement". That is why the "ex-date" is not always (but generally are) in the "press release".

Pay-Date = that is the day the company will pay the dividend (remember the company has to search records to find owners of their stock on "ownership-date" and THEN pay the dividend). Depending on your broker, your dividend may not show in your account balance until the following day because of how they reconcile your account.

Projected Dividend-Date = If a company is regularly paying a dividend, then the "projected dividend-date" is the assumed date of the next payment. Nothing is certain until the "Announcement".

Captured Dividend = this is a term that I use to indicate I have "earned" the dividend but have not been paid. "Ex-Date" but before "Pay-Date".

I hope this covers everything but if you have any more questions about this or have another questions, fell free to ask them in the comment section or e-mail them.

Disclaimer, I am not a professional.
your comments are welcome and appreciated or 

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