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Finance: What are Dividends: Declaration date, Dated date, Pay date, Effective Date, Ex-Distribution Date, Ex-Date, and Reset Date? 15 Views

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What are Dividends: Declaration date, Dated date, Pay date, Effective date, Ex-distribution date, Ex-Date, and Reset date? Dividends are sums of money or shares of stock paid to shareholders as a result of favorable earnings. The goal is to pay dividends regularly so it is possible that they could still be paid in times of not so great earnings. The declaration date begins the process of paying dividends and marks the day when dividends are announced. Dividends are paid out on the pay date and the ex-dividend date marks when stock must be purchased by in order to receive the next round of dividends. On the record date, the company determines which shareholders are eligible to receive dividends, thus the ex-dividend date is one day before this.

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00:00
Finance a la shmoop what are dividends? that is declaration date ex-dividend
00:07
date pay date and record date yeah so you thought you could just invest in the [Money transfers to market for stock]
00:12
stock pay 20 bucks a share and get to know 30 cents a share in dividends four
00:16
times a year right? That was all you needed to know oh yeah not so easy well maybe
00:21
it is easy but things are never so simple on the street the mean street you

00:26
know the Wall Street when you buy a share of stock that pays a dividend a
00:30
whole bunch of technical questions get asked and they basically all revolve [Question marks revolving around a stock]
00:34
around whether or not you are entitled to that thirty cents and if you think
00:39
about it dividends have been around for a long long time a whole bunch of
00:42
schemers out there trying to kind of ripoff that dividend in nefarious ways [Person tears off dividend from stock]
00:46
all right well why does it matter whether you're entitled to that thirty
00:50
cents or not well with all those nefarious people out there wouldn't you
00:54
think there are a whole bunch of sharpies they're trying to legally take [Man reading book of laws and loopholes]
00:57
advantage of the system like you know buying that $20 a share stock the day
01:02
before the dividend is payable holding the stock until that investor is owed
01:07
the dividend and then just selling the stock like five minutes later it's like
01:11
an ATM courtesy of equity stock dividend right good buy it and you sell it a [Person uses a equity stock dividends ATM]
01:16
couple days later make free profit move on well the markets are smarter than we
01:20
are and they adjust to that very quickly So anyway the laws have to
01:25
be crystal clear as they apply to that process or innocent people kind of get [Man locked away in a cell]
01:30
taken and each of the terms are on the technicals behind who gets what when in
01:33
the land of dividends matters a lot all right first up declaration date okay
01:38
that's the date when the board of directors publicly announces that they
01:42
will in fact pay a dividend along with the details relating to that dividend
01:46
like how big it will be the day you'll have to own the stock to be entitled to
01:51
receive that dividend and also the date that the dividend will actually be paid
01:56
all right so that's that next up the ex-dividend date and yes it [Laws appear]
02:00
sounds like something Charles Xavier and Magneto would argue about but in fact [Charles Xavier and Magneto appear]
02:05
it's not although that'd be a cool superhero to be like a ex-dividend
02:09
opposed to an x-men maybe that's like a Wall Street superhero
02:11
our lawyers are glaring at us right now the ex-dividend date is the last date
02:16
after which shares bought in a given company don't automatically have that
02:21
periods dividend attached so think about it like it's a Macy's white flower day [Macy's advert appears on TV screen]
02:26
sale discount on the share you're buying if you don't buy it by say
02:31
close of market Tuesday or whenever it is well then you don't get it that's the
02:36
ex-dividend date you don't get that freebie dividend discount when you buy
02:40
the share if you buy it after the close like at 4:01 p.m. on Tuesday you had to
02:45
buy it before the market closed on that Tuesday or whenever the ex-dividend date [Man stood next to clock]
02:49
was got it all right so all the other dates before this are called cum
02:53
dividend or with dividend such that anyone owning this stock at that period
02:58
has legal right to receive the dividend all right it is natural then for a $40
03:03
stock paying say a 50 cent dividend to naturally drop 50 cents the day after
03:09
the ex-dividend date comes into effect and in reality more or less this is what
03:14
happens albeit with many twists and turns in the market that is the stock
03:18
goes from 40 bucks to 39.50 a share you know the next minute so the key
03:23
delimiter date is the record date shareholders have to register their
03:28
ownership and yes your brokerage does that automatically usually of a given
03:32
share of stock on or before the date of record to get that dividend and
03:36
eventually when the dividend is finally paid magically that date is called the [Magicians stick taps stock and disappears in smoke]
03:41
pay date yeah shocker so yeah that's a lot of dates to keep track of kind of
03:47
reminds us of ourselves when we were in our 20s in college and had a social life
03:51
not anymore [Group of girls sitting together]
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