When are dividends paid?
/Dividends are paid on the date designated by a company's board of directors as the payment date. The board announces this date on the dividend declaration date. Their decision to issue a payment is based on their review of the company’s financial statements, to see if the entity can afford to pay investors. The board may authorize dividends once a month, quarter, or year, or possibly semi-annually. Dividends are most commonly issued on a quarterly basis. If a company has paid on a certain schedule in the past, it generally adheres to that dividend payment schedule in the future, especially if it wants to attract "income investors" who hold the stock primarily because of a consistent dividend stream.
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Who Receives Dividend Payments?
If an investor is the holder of a company's shares at the close of trading on the day before the ex-dividend date associated with a dividend, then that investor will be paid the dividend. The ex-dividend date is the first date following the declaration of a dividend on which the holder of stock is not entitled to receive the next dividend payment. This is normally two days before the date of record.
If shares are bought between the ex-dividend date and the dividend payment date, then the purchasing investor will not receive a dividend; the dividend will instead be paid to a prior shareholder.
How are Dividends Paid?
Dividends are deposited directly into an investor's online trading account. Otherwise, they are received and handled by an investor's broker, or mailed directly to the investor. An investor may also have an automatic dividend reinvestment option set up, in which case the issuer retains the funds and uses them to issue additional shares to the investor; the result is that the investor gradually builds up more and more dividend payments that are continually reinvested.
Investor Relations Impact of Dividend Payments
If a company wants to establish a reputation for consistent dividend payments, it should include information about the historical timing and amounts of its dividend payments in the investor relations section of its website, including the dates on which such payments were made in the past.
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