Dividends are distributions of money that a company pays to its shareholders. They are usually paid quarterly and are expressed as a percentage of the stock price.

Some traders look for companies that pay dividends on their shares and then accumulate dividend payments from the stocks they invest in. The dividend payment goes through some stages, including the official statement and listing of the payable dividends.

The ex-dividend date is the day on which you trade stocks without qualifying for a dividend payment. It means that if you buy shares on the ex-date of a company you will not receive dividends for the upcoming dividend period even if you keep holding the shares.

During the ex-dividend date, the company figures out which shareholders are eligible for dividends. This stage comes before the recording stage where the official statement about recipients is made.

Note that the stock price drops a little on the dividend payment day - it drops by the amount of the overall dividends paid. Therefore, if you buy stocks before the ex-dividend date, it does not mean that you are making a huge profit.

Similarly, missing the ex-dividend date does not mean that you are losing a huge gaining opportunity, because the stock price is more likely to drop due to the dividend distributions.

Shareholders who are eligible for receiving dividends are those who buy shares at least one business day before the ex-date. They are listed in the company records and receive internal communication from the company.

Shareholders get notifications from the company mostly through email, which includes the dividend information such as the ex-dividend date, the record day, the dividend payment amount, and the payment date.

Therefore, it is easier for traders who own shares for quite a long time to find the ex-dividend date, as they receive all the information from the company.

For non-shareholders

Traders who look to buy shares in a company that pays dividends do not receive any information from the company. Since traders are not listed in the company records, they need to look for the information elsewhere.

Investors can find an ex-dividend date on investment and trading websites. There are listings for companies that pay dividends, including the declaration date, the ex-date, and every other stage regarding the company dividend specifications.

Finding the ex-date is important for your dividend stock portfolio. Therefore, you need to learn the process by which dividends are paid, starting from the company declaring dividend payments, to the stage where they actually pay them out.

There are four stages, and each stage comes on a different date which traders need to keep in mind. They are:

• Declaration date
• Ex-dividend date
• Record date
• Payment date

Declaration date

This is the first day when the company management or board of directors announces that they will pay dividends. They then declare the dates for the upcoming stages in the payment process, including the payment day.

These announcements are made regularly depending on how often the dividends are paid. It can be either quarterly, semiannually, or annually. Companies will also disclose the dividend payment amount as well as the earnings report of the company.

This information is circulated among shareholders through mail or emails. This declaration also becomes available through financial sources and websites, which list companies’ stocks and dividend information.

Ex-dividend date

This is the day that determines who is eligible to receive dividends. Traders need to buy shares at least one business day before the ex-date in order to be listed in the company records.

If a trader buys shares before the ex-dividend date, even just one business day before, they are going to get paid dividends on the payment date that is determined by the company.

During this day, the stock price drops slightly in exchange for the total sum of dividends paid to all shareholders.

Record date

On this day, the company produces official statements including information on previous dates. These are official documents that include which traders purchased shares and will receive dividends, and everything is recorded in the company books.

Payment date

The fourth and final day of the dividend payment process is the day when the dividend is paid. On this day, dividends become payable from the company books, and they become receivable on the shareholders' side.

“A lot of people love Oreos. So their manufacturer is making money. That means more dividends for shareholders.” - Maria Bartiromo

• The ex-dividend date is the day when traders can buy shares without qualifying for the current dividend payment
• The ex-date comes after the declaration date, and it lists all the shareholders who are eligible to receive the dividend
• Traders need to buy shares at least one business day before the ex-date, in order to qualify for the dividend payment
• Shareholders who hold the shares for a longer time receive ex-dividend information directly from the company. This information comes as notifications in the mail or email
• Investors who do not own shares, need to find information on investing websites and sources that list all stocks and dividend information about companies