The larger question is why would investors do this? There is a sophisticated investment strategy known as dividend harvesting. They will receive a dividend based on the number of shares they held as of the ex-dividend date. Payment Date - This is the day a shareholder receives the dividend payment electronically or when the dividend payment is sent if the shareholder is receiving a paper check.Īn investor can choose to sell shares before the payment date and still collect the divided. That’s why an investor needs to buy shares before the ex-dividend date. Why this date is important to investors: Most trades are now able to be closed within seconds, but it still takes a day for the record of the trade to close. Sometimes this is the same day as the ex-dividend date, but frequently it is a day or two later. Of course, if an investor likes the long-term outlook for the company they can continue to own the stock to collect future dividends.ĭate of Record - This is the day a company reviews its records in order to identify its shareholders. If a shareholder does not own shares (or fractional shares) before the ex-dividend date, they will not be eligible for that quarter’s dividend. Why this date is important to investors: It is a firm date. The ex-dividend date is set automatically once the date of record is announced. So if the ex-dividend date is on a Monday, investors need to buy the stock no later than the previous Friday. For a shareholder to collect the dividend they must own the stock before the ex-dividend date. However, if a company announces it is raising its dividend it frequently results in the stock price going up as investors anticipate that more investors will want to collect the dividend.Įx-Dividend Date – This is the day that an investor must own the stock in order to be eligible to receive a dividend payment.

All of these outcomes are usually communicated by the company in advance of the declaration date. A company can maintain its dividend, it could raise its dividend, it can cut its dividend, or it can suspend its dividend. Why this date is important to investors: There are four possible outcomes on the declaration date. On this day, the Board of Directors will also announce the date of record and the payment date. Investors need to pay attention to four key dates.ĭeclaration Date - This is the date the company’s Board of Directors announces it will pay a dividend. The process of how a dividend is issued follows a predictable pattern.

The record date is typically one day after the ex-dividend date to allow trades to close. Investors looking to collect the company’s dividend must be shareholders of record by the company’s record date. With those variables, MCD stock would, theoretically, trade at $238.62 when trading begins on the ex-dividend date. For this example, we’ll assume that the company pays a quarterly dividend of $1.38 and the stock price the day before the ex-dividend date is $240. To illustrate how this works, let’s use McDonald’s (NYSE:MCD) stock.

Dia etf jan 2017 ex dividend