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Important dates for dividend

what is ex-dividend date? and entitlement date?


Nearly every time after a company announced dividend payment, several investors will start to ask for clarification about the dates. What are the dates all about?
In dividend payment, there are two main dates that you need to take care of.
  1. EX-DIVIDEND DATE
As the name implied, ex-dividend is past dividend. (Remember it as ex-gf, your past gf). So, ex-dividend date is the date when the dividend payment has passed. As a result, this implies that if you want to be eligible for a dividend payment. You must own a stock before its ex-dividend date.
For example, company ABC has its ex-dividend date on 2nd March 2016. Hence, in order to get the dividend, you must own the stock on 1st March 2016. If you sell out the stock on 1st March 2016, then you will not receive any dividend. But if you sell out the stock on 2nd March 2016, it’s totally fine. Also, if you buy the stock on 2nd March 2016, you will not get any dividend as it is already ex-dividend.
Now, you might have a thought in your mind. Could I buy stock ABC on 1st March 2016, get the dividend, and then sell it off on 2nd March??!! Then I will get the dividend for free! Hehehe.
Yes, I do admit I thought that way too when I first started investing. Although this method is theoretically workable, it seldom does. This is because on the ex-dividend date, the share price will normally be adjusted. For instance, if the share price is RM1.10 and the dividend being paid is RM0.05, then the share price might be adjusted to RM1.05. This is the so called “Adjustment”. It is to be noted that this adjustment is not a must and is not fixed by any side. It is just a reflection of the investor’s perception on the share price. Normally, the share price will reduce by the amount of dividend paid.
  1. PAYMENT DATE
This is the day when dividend will be paid to the shareholders. Normally, it take one or two days to receive the dividend into your bank account.

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