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Dividend Capture Explained

Dividend Capture Explained

Dividend capture is buying a stock just prior to the Ex-dividend date in order to capture the dividend.

The Ex-dividend Date is a key date to remember for dividend paying stocks.
If you purchase stock prior to the Ex-dividend date, and do not sell prior to the Ex-dividend date, you are a stockholder on the Record Date and YOU WILL receive the upcoming declared dividend payment.

Company XYZ announces their upcoming Reported Dividend in a Press Release Dated October 03, 2013
Company XYZ declares a regular dividend payable on November 01, 2013 to shareholder of Record on October 25, 2013. The Ex-dividend Date is October 23, 2031.

Reported Date

Ex-Dividend Date

Record Date

Payable Date

10/03/13

10/23/13

10/25/13

11/01/13

Click to enlarge

It is important to know when you buy or sell stock; there is a three-day settlement (three stock trading days) on all buy or sell stock transaction orders.

You must always be a stockholder on the Record Date to receive a dividend payment. To be entitled to the upcoming dividend you would need to buy the stock three days prior to the Record Date, one day prior to the Ex-dividend Date, October 23, 2013.

Upon the opening of the Market on October 23, 2013, two stock market trading days before the Record Date the stock price is quoted Ex-dividend and is adjusted by the amount of the declared dividend being paid and begins trading at the current valuation market bid/ask price.
The minimum holding requirement to be entitled to the upcoming stock dividend payment is to buy a stock three stock trading days prior to the Record Date, and Selling on or after the Ex-dividend Date.

You must own the stock one-day to be entitled to receive the upcoming declared stock dividend payment.

If you purchase stock prior to the Ex-dividend date, and sell before the Ex-dividend Date, you WILL NOT be a stockholder on the Record Date and you WILL NOT receive the upcoming declared dividend payment.