You're all excited. You finally have money to invest, and you're planning to plunk $10,000 into Philip Morris International
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
Company |
Dividend Yield |
Dividend Pay Date |
Ex-Dividend Date |
---|---|---|---|
ExxonMobil |
2.4% |
Sept. 9 |
Aug. 11 |
Microsoft |
2.1% |
Dec. 9 |
Nov. 17 |
JPMorgan Chase |
0.4% |
Oct. 30 |
Oct. 2 |
General Electric |
2.4% |
Oct. 25 |
Sept. 17 |
Johnson & Johnson |
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.