When Are Dividends Paid on Shares?
- Dividend payments from shares of stock are not guaranteed. Each dividend must be declared by the corporation's board of directors. Dividend-paying stocks tend to pay the dividends at about the same dates, but the payments can be changed or eliminated at any time. Companies with long histories of paying steady dividends are least likely to make significant changes in the payment schedule or amounts of dividend payments.
- When a company's board of directors declares a dividend, the announcement will include the amount of the dividend, the dividend record date and the payment date. The record date is the date when anyone owning shares of the stock will be entitled to received the dividend. These investors are owners of "record." The payment date is the day when the dividend will be deposited in an investor's brokerage account or designated bank account. The payment date may be a few days to several weeks after the record date.
- Investors who buy shares of the stock on or after the ex-dividend date will not receive the recently declared dividend. The ex-dividend date is three business days before the record date for the dividend payment. This date is not declared by the company paying the dividend but must be calculated by an investor. On the ex-dividend date, the share price will drop by the amount of the dividend to be paid.
- One way to get notification of when a dividend has been declared is to sign up for email notification of press releases on the investor relations page of the company website. For someone who wants to buy a stock to collect the dividend, the ex-dividend date is most important and the shares must be purchased before that day. For an investor who owns shares of a stock, the payment date is the day the dividend will be received by the investor.