Don't Miss That Dividend!

You're all excited. You finally have money to invest, and you're planning to plunk $10,000 into Philip Morris International (NYSE: PM  ) . You're especially psyched about its generous 4.8% dividend yield, as it will mean a quarterly payout of $120 for you.

Well, hold those horses. The stock's "ex-dividend" date was yesterday, Sept. 24. That means you're not entitled to its upcoming dividend. Dividends don't get paid to whomever is holding a share of stock on the dividend's payment date. Instead, you have to own a stock before its ex-dividend date in order to receive the payout. (In newspaper listings, you'll sometimes see an "x" next to stocks that are trading ex-dividend.)

If you sell your shares on or after that ex-dividend date, you'll still get the dividend payment.

Fortunately, it's not a secret when stocks go "ex-dividend." You can look up such info online (and can always just give the company a jingle and ask). At Yahoo! Finance, for example, look up Kraft Foods (NYSE: KFT  ) and you'll see that its upcoming quarterly dividend payout will be distributed on Oct. 13, and that its ex-dividend date is Sept. 28. Here's the scoop on five of the biggest dividend payers out there, to give you an idea of how far apart the dates tend to be:

Company

Dividend Yield

Dividend Pay Date

Ex-Dividend Date

ExxonMobil (NYSE: XOM  )

2.4%

Sept. 9

Aug. 11

Microsoft (Nasdaq: MSFT  )

2.1%

Dec. 9

Nov. 17

JPMorgan Chase (NYSE: JPM  )

0.4%

Oct. 30

Oct. 2

General Electric (NYSE: GE  )

2.4%

Oct. 25

Sept. 17

Johnson & Johnson (NYSE: JNJ  )

3.2%

Sept. 7

Aug. 21

Data: Yahoo! Finance. Dates are for most recently declared dividend.

Don't stumble on this three-step
Maybe you're thinking of playing around with the timing of ex-dividend dates. Perhaps you're thinking of buying shares of a dividend payer right before the ex-dividend date, selling those shares right after for a profit, and then collecting the dividend on the payout date on top of that. Think again.

Stocks tend to fall in price on their ex-dividend date, compensating for the upcoming dividend. So if the stock is paying a 1% dividend, the stock will likely dip around 1% when it opens for trading on the ex-dividend date.

Don't let all this distract you from the very real power of long-term dividend investing.

For more ideas on dividend stocks, grab a free trial of our Motley Fool Income Investor newsletter, which will permit you to see all our recommendations, some of which offer yields north of 8%.

Longtime Fool contributor Selena Maranjian owns shares of Johnson & Johnson, Microsoft, and General Electric. Microsoft is a Motley Fool Inside Value pick. Johnson & Johnson is a Motley Fool Income Investor selection. Philip Morris International is a Motley Fool Global Gains recommendation. Try any of our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.

 


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 25, 2009, at 12:27 PM, Huayra wrote:

    Would go for MO instead of PM.. and not for $ 10.000 probably..

    Better to diversify with such an amount :)

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