Hello everyone. I am just seeking information about dividend payout.
How long do I need to hold the stock to qualify for the dividend? I googled it and some sources said I need to order the stock at least one day before and others says I need to hold the stock over weeks or months.
Each stock has an ex dividend date, you need to hold it until the end of that day.
Haven’t heard if the weeks or months thing before but I’ve certainly got a dividend after just having it for a few days before
Question about Dividend paying stocks. Do I need to own the stock prior to declaration or can I just buy a few days before the payout happens? I intend on purchasing exclusively dividend paying stocks and would just like to be clear in terms of how long prior to a payout I need to own the share. The last thing I want to do is buy in to a stock, miss out on the dividend, and having to wait a lengthy period of time before it comes around again.
Great question! We’ve also written a bit about this on our blog -
However, the dividend doesn’t just go to whomever holds the stock on payment day. Instead when companies set the payment day for dividends, they assign a record date to check their shareholders in line for the money.
Companies also set an ex-dividend date before the record date. The ex-dividend date is usually a few business days before record date.
An ex-dividend date is the day on which the stock no longer trades with the right to the upcoming dividend. If someone sells a stock on or after ex-dividend day, that seller still gets the next dividend, not the buyer.
There’s a good website for checking this https://www.dividenddata.co.uk/ which lets you sort UK stocks (although not ETFs unfortunately) based on their ex-dividend date & the dividend value etc.
As @Antidev said, whilst the payment process works exactly the way you understand it, it is not some magic tactics that can be employed for outperforming the market because otherwise, everyone would have done it this way