![]() Because investors purchasing the stock on the ex-dividend date do not receive the dividend, the price of the stock should theoretically fall by the dividend amount. ![]() Theoretically, a stock’s price should reflect the expected dividend payment prior to the ex-dividend date. ![]() They are free to sell the stock on the ex dividend date or at any time after that and they will still receive the dividend. To capture the dividend, an investor needs to buy the stock before the ex dividend date. It can also occur on a weekend or holiday. The payment date does not have to be a business day. The payment date or payable date is the date on which a company mails or transfers dividend payments to its shareholders of record. The record date is typically one or two business days after the ex-date. The record date is the business day on which a shareholder that is listed in the company’s records is deemed to have ownership of the company’s shares for the purpose of deciding who can and who cannot receive a dividend when paid. This date is important because investors who acquire shares after the ex dividend date will not receive the dividend. This means that investors who owned shares before and on the ex dividend date will receive a dividend once it is paid. The ex dividend date is the first business day that each share will trade without its dividend. At that time, the company will also announce other key dates including the record date and the payment date. The declaration date is the day on which a company issues a statement declaring its intent to pay a dividend. From the time a company’s Board of Directors decide to pay share holders a dividend to the time the investor receives the funds, a chronology of events unfolds. It’s a fairly straightforward strategy.ĭividend payments follow a well defined process. With this strategy, investors own stocks for the minimum time necessary to qualify for the dividend. Generate extra income with this hedge fund trading strategy. Understand the Dividend ProcessĪmong the strategies that hedge funds employ is the dividend capture strategy. This means investors have put a great deal of effort into finding strategies to increase income. This is simply because investors will invariably seek more income no matter what the level of available income is. While dividends have been higher in the past, many investors have sought higher income. The chart below shows the dividend yield of the S&P 500 index. But, recent income from dividends has fallen to historic lows. These regular payments can build large fortunes over time.
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