Ex-Dividend  Date and Dividend Investing

ex-dividend date definition

Many corporations reward their stockholders for holding the stock by paying dividends. This is very true for blue-chip stalwarts. These regularly generate huge profits and decide to distribute that wealth to the company owners. Smaller outfits regularly don’t pay out dividends as they need the money for numerous purposes including:

- Growth thru coalition and / or purchase

- Balance sheet consolidation ( to shore up capital so the accounts look good ).

But it is not the only preserve of smaller corporations to withhold payments. Behemoths also may decide that dividend payments don’t suit their enterprize model or would possibly not be acceptable given other variables ( like input cost ).

An example being Warren Buffet’s Berkshire Hathaway. Mr. Smorgasboard is regarded as one of the best speculators ever and he conducts most of his activity thru this company. If you do like the idea of making an investment in dividend paying companies – a sort of revenue investing – there’s a date you want to keep an eye out for. It’s called the ex-dividend  dates.

The choice makers gather intermittently to prepare or sign off on accounts and decide on the proper dividend payments. Dependent on company performance and prevailing industrial conditions it is going to be announced a dividend will be paid to all stockholders on the books on date X, this is the ex-dividend  dates. The practice of purchasing shares a couple of days prior to the ex-dividend  dates and selling those self same shares for approximately the same price one or two days after the date is known as ‘dividend investing’.

The company is required to pay you dividends even though you have sold the shares as you held the company on the date. This activity can also often reveal why a share price may rise ( on the back of no reports ) coming up to the ex-dividend  dates, and drop back down later. Such share transactions are legitimized and I am sure many stockholders make cash from it.

But there are hazards. The share price, at which the financier attempts to sell the shares after the date has passed, could be below that at that the shares were acquired. The investment style will suit those that don’t wish to tie up capital in long-term buy-and-hold type transactions. It’ll also suit people who have the time to trawl RNS feeds and alternative sources of company info to gather the all crucial ex-dividend  dates list. Whatever your private preference it’s another variable to look out for when investing in the stockmarket.

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