RE: Dividend17 Nov 2019 17:56
How Long Do You Need to Own Stock to Get a Dividend Payout?
By: John Csiszar | Reviewed by: Catreal Wood, B.A. in Finance | Updated March 06, 2019
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1. How Does the Stock Price Change When a Dividend Is Paid?
2. REIT Dividend Holding Period
3. Does the Settlement Date Have to Occur Before the Ex-Dividend Date to Receive a Dividend?
In the simplest sense, you only need to own a stock for two business days to get a dividend payout. Technically, you could even buy a stock with one second left before the market close and still be entitled to the dividend when the market opens two business days later. However, buying a stock just for a dividend can prove costly. To understand the entire process, you'll have to understand the terms ex-dividend date, record date and payout date.
Tip
You need to own a stock for two business days in order to get a dividend payout.
Ex-Dividend Date
The ex-dividend date is the date that stock shares trade without the dividend. Shareholders who buy a stock on the ex-dividend date are not entitled to the next dividend payout. Since these shareholders miss out on one of the assets that make a stock valuable, the stock price drops by the amount of the quarterly dividend on the ex-dividend date.
For example, a stock that pays a $1 annual dividend pays that dividend in four quarterly amounts of $0.25 each. If the stock's closing price the day before the ex-dividend date if $50 per share, that stock will be marked down to $49.75 at the next day's opening.
Record Date
The record date is the date that your name needs to be on the company's books as a registered shareholder. The record date is set one business day after the ex-dividend date. So, to be officially recorded as a shareholder entitled to the next quarter's dividend, you must buy a stock two business days before the record date.
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