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Dividend Investment Payment
A dividend is a portion of a company's earnings that the board of directors has decided to pay shareholders as a rate of return or yield on the company's net earnings available for stockholders. Dividend payments can be in stock or in cash.
Common stockholders receive payments based on earnings and are usually paid quarterly or annual. Preferred stockholders normally receive a fixed cash dividend, similar to bondholders getting interest payments.
Emerging or growth companies normally do not pay high or sometimes any dividends.
Dates
When a company announces an investment dividend payment to shareholders, there are certain dates that get set. The declaration date is when the board announces a dividend is being paid (cash or stock). The Record date is also set. That is when people must own the stock on (settlement included) to get the yield payment. The payable date is when the money or stock credit is mailed to shareholders.
Ex Dividend Date
The ex dividend date or ex-date is the first day the stock will trade without the dividend on it. Thus people who wish to get their payment credited, they must by the stock no later than 3 business days prior to the record date. The ex-dividend date is 2 business days prior to the record date.
Yield
A stock's yeild is based on the share price and the amount of yearly dividend that is paid to shareholders.
Copyright  2008 American Investment Training, Inc.
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