Understanding Dividend Declarations: A Step-by-Step Guide

You own a stock that you expect to receive dividends from. How can you calculate when your dividend is declared, whether you are an owner of record, and when the dividend is paid?

The answers follow.

How to Calculate Dividends Declared

Step 1

Go to your favorite internet site for stock research (or www.finance.yahoo.com if you don't have a favorite) and enter in the ticker of the stock in question.

Step 2

Go to the part where the site provides dividend information. In finance.yahoo.com, this is about two-thirds of the way down the front page under the heading "Key Statistics."

Step 3

Look up the "x-dividend date" (this may also be called the "record date") and "dividend date" (this many all be called the "pay date").

Step 4

If you hold the stock at the close of business as of the "x-dividend date" then you will receive the declared dividend.

Step 5

To calculate your total payout, multiply the declared dividend (found elsewhere on the same site) by your total number of shares. This represents the amount you'll get paid on the "dividend date."

Tip

• Always try to verify data by going to the company site and reading the company release regarding its dividend.

Warning

• If you buy a stock, it currently takes three business days to settle, so you don’t “hold” the stock until the close of business on the third business day after the trade.

• If you sell a stock, you continue to “hold” the stock until the third business day after the trade.