4 Key Dates in Dividend Investing

Why Your Dividends Haven’t Arrived Yet – 4 Dates You NEED to Know Before You Buy a Stock on youtube.com/@theDividendExperiment

In this thread, we will cover the most asked question on the Trading 212 Pi feed: Why haven’t I got my dividends yet?

As a dividend investor, there are four key dates that you need to know before you can start expecting your dividends to start rolling in for each dividend-paying stock.

Declaration Date:

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The Declaration includes the size of the dividend or amount of money of the dividend being issued and outlines the record date and payment date. Of all the four dates, this is the date that’s more like a good-to-know date rather than the one that you should pay close attention to. 

It’s just the management letting you know what will happen and announcing the declared dividend, but the other dates down the line are more important when it comes to your actual dividends coming in.

Ex-Dividend Date: 

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The ex-dividend date is the first day that the stock trades without a dividend. The company doesn’t set the ex-dividend date; the ex-dividend date is set by the stock exchange where the company’s stock is traded. 

The ex-dividend date usually occurs up to three days before the record date. If you buy shares on the day of the ex-dividend date or the days after the ex-dividend date, you are not entitled to a dividend because eligibility requires holding the stock before the ex-dividend date. 

That’s what the ‘X’ part means; it means without or without a dividend, indicating if you’re not buying the stock before the ex-dividend date, you will not receive the dividend. So, the ex-dividend date is the first day that you buy that goes without a dividend, and you have to wait for the next one.

Record Date:

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The record date, also known as the date of record, is the date on which the investor must be on the company’s books in order to receive a dividend. 

The record date is commonly confused with the ex-dividend date, and because of the similar implications, it’s not really mentioned as much as the ex-dividend date. The record date is set by the company, and the ex-dividend date is set by the stock exchange. 

The ex-dividend date is earlier than the record date due to the fact that there’s an assessment period for stock trades on exchanges.

When an investor purchases a stock on an exchange, it takes time for the investor’s information to be updated on the company’s books to be eligible to receive cash dividends. 

In the US, which has the biggest exchanges in the world, financial products are on a T+2 settlement period to be eligible to receive the dividend. This essentially means that it takes two business days for a stock trade to settle.

Payment Date:

This is when the money should be on its way to your bank account. The payment date is the date on which the dividend is paid to the shareholders, marking the final step in the dividend payout process. 

Dividend payments may be either mailed or electronically transferred to the accounts of shareholders, depending on how you bought the stock.

Now, even though this is a date when we should be getting our payments into our banks, there can be some issues and delays in dividend payments. The first delay could be that you’re investing in foreign stocks, impacting when you receive the dividend. 

Due to the fact that buying stocks from exchanges all over the world has various administrative, and in some cases, you need to pay withholding tax on your dividend income. So, this all takes time, and you might see a delay in the dividend hitting your brokerage or bank account. 

Another delay could be that you’re investing in fractional shares. You’re still entitled to fractional dividends with fractional shares, but because they’re split up, that means you have to wait until all that’s sorted and organized to receive your portion of the stock dividend. 

One more reason could be that you’re using a custodial brokerage, and there could be some delay in sorting out to you individually. All your investments are held together with other clients, affecting when you receive the dividend payout.

So now you have some context; we can finally answer the question of why you haven’t received your dividends yet. The first reason could be that you didn’t buy before the next dividend date, and this means you need to wait until the next dividend. 

Unfortunately, you’ve missed out on it this time around by not purchasing the stock before the ex-dividend date. Another reason could be that you’re just not patient enough to see the dividend payout in your account. 

There is some time between the ex-dividend date and the payment date, and this can vary depending on the range of factors mentioned earlier.

For reference, when you start investing in the almost daily dividend pie, you might have to wait anywhere from two to six weeks to start getting paid out of dividends after you hit the minimum recommended amount of £400.

A third reason could be that you’re buying foreign stocks and still need to wait longer to receive the dividend. The fourth reason is that you might not notice that the company has paused or completely cut its dividend, and you’re just waiting for a dividend that will never come.