How companys pay dividends on their stocks?

Posted by admin on April 5th, 2010

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Posted in Dividends Tags: Dividends, stock, Stocks

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One Response to “How companys pay dividends on their stocks?”

1. nicedoc says:

   April 5, 2010 at 2:39 am

   By convention most pay them quarterly but they can choose to pay them in any schedule they want. I have a stock for example that gives out dividends every month.

   Dividends are paid to shareholders who own the stock at the ex-dividend date (usually about a month before the payout date). If purchase the stock after the ex-dividend date, you won’t get the dividend for that period. Conversely, if you own the stock at the time of the ex-dividend date but sell it afterwards but before the payout date, you will still get the dividend.

   The dividend is not affected by the share price though a drop in share price may indicate financial troubles that could put future dividends at risk. That’s why you should be cautious about company’s with fat dividend payouts (e.g. 7% or more) since, rather than being a bargain, it more likely means a dividend cut is in the near future.