If you're investing in dividend stocks, it's important to understand how and when a dividend is paid. In most cases, stock dividends are paid four times per year, or quarterly. There are exceptions, as each company's board of directors determines when and if it will pay a dividend, but the vast majority of companies that pay a dividend do so quarterly.
In addition to thewhen, it's also important to knowhowyou'll get paid. There are also several important dates to know that determine if you are entitled to the dividend. Keep reading for a breakdown of this important information that every dividend investor needs to understand.
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How often are dividends paid on stocks?
How often are dividends paid on stocks?
The vast majority of U.S. companies that pay dividends issue the payout quarterly. There are some exceptions, including a handful of companies that pay dividends every month, most notablyRealty Income, which bills itself as "the monthly dividend company." Realty Income has paid a dividend every month for over 600 consecutive months, and is now a Dividend Aristocrat.
On rare occasions a company may issue what's known as a special dividend. Often this is the result of a large asset sale or some other event that results in a large nonrecurring profit, while other companies use a special dividend to return extra money to shareholders every few years. A notable example is Costco Wholesale(COST -0.11%), which has paid substantial special dividends three times over the past decade, in addition to its regular quarterly dividend:
COST Dividend data by YCharts
Important dividend dates to know
Important dividend dates to know
There are three important dates to understand if you invest in any dividend stocks:
- Theex-dividend dateis the first day a stock trades without the most recent dividend being factored into the share price. In other words, if you buy shares on or after this date, you will notget the next dividend the company is scheduled to pay.
- Thepayment dateis the date a company will make the next dividend payment to shareholders. This may or may not be the date that the dividend arrives in your account; depending on the brokerage you use, there could be a delay of a day or more in getting your dividend payment. The payment date can range from just a few days to more than a month after the board of directors declares a dividend is coming.
- Therecord dateis the date you must own shares on or before in order to be entitled to the dividend.
When do you have to buy a stock to get paid the next dividend?
When do you have to buy a stock to get paid the next dividend?
Here's an example of how this works in real time.Apple (AAPL -0.81%) declared a dividend -- that is, made a formal disclosure that the board of directors had approved a dividend -- of $0.82 per share on July 30, 2020. The payment date was Aug. 13, to shareholders of record on Aug. 10, meaning the ex-div date was Aug. 7 (the prior Friday, since Aug. 10 was a Monday).
Let's break that down: Apple paid a dividend of $0.82 per share on Aug. 13 to all shareholders of record as of Aug. 10. This is where the ex-div date comes in. In order to be entitled to the upcoming dividend you would need to have owned or bought Apple shares beforeAug. 7, the ex-div date for the upcoming dividend.
Here's a table of some popular dividend stocks to further illustrate these important dates:
Data source: Company filings.| Company | Dividend Amount | Dividend Frequency | Declared Date | Record Date | Ex-Dividend Date | Payment Date |
|---|
| Apple | $0.82 | Quarterly | 7/30/2020 | 8/10/2020 | 8/7/2020 | 8/13/2020 |
| Coca-Cola(NYSE:KO) | $0.41 | Quarterly | 7/16/2020 | 9/15/2020 | 9/14/2020 | 10/1/2020 |
| AT&T(NYSE:T) | $0.52 | Quarterly | 6/26/2020 | 7/10/2020 | 7/9/2020 | 8/3/2020 |
| Realty Income(NYSE:O) | $0.2335 | Monthly | 8/18/2020 | 9/1/2020 | 8/31/2020 | 9/15/2020 |
To summarize: A company's board declares a dividend, to be paid on a certain date to shareholders of record as of a prior date. In order to be one of those shareholders of record, you need to buy or already own shares before the ex-div date, which is the business day before the record date.
How are dividends paid?
How are dividends paid?
In the vast majority of cases, dividends are paid in cash by the company to your brokerage, which puts the money in your account. Some companies offer direct stock investment plans, but with low-cost -- in many cases zero-commission -- trading available from most online brokers, there's minimal benefit to using this option these days.
As to thewhen, the dividends show up in your brokerage account on or within a few days of the payment date, depending on your broker. If you're counting on those dividends for income, it might take a few more days to transfer that cash out of your brokerage account and into your banking accounts, so factor the additional time in for budgeting purposes.
There are also some stocks that don't pay in cash, instead paying in more shares of a company's stock. This is rare, but it does happen, so make sure you verify whether you're getting a cash or stock dividend. Generally companies make it clear if the dividend is not being paid in cash.
Again, if you want cash -- either as dividend income or to invest in other stocks -- a stock dividend means it will take a little longer to get your hands on actual money. You'll have to sell the shares, then wait for the trade to settle -- several more business days -- before your broker will let you take the cash out of your account.
Related dividend stocks topics
Dividend Achievers ListThese companies have at least 10 years of dividend growth.
Dividend Kings of 2024These companies have increased their dividends every year for 50+ years.
How to Calculate Dividends (With or Without a Balance Sheet)There's a formula to calculating dividends. Learn how to use it to find yours.
Jason Hall has positions in Realty Income. The Motley Fool has positions in and recommends Apple, Costco Wholesale, and Realty Income. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.
FAQs
Most companies that pay a regular dividend do so quarterly, although some pay monthly, biannually, or annually.
When and how often are dividends paid? ›
Dividends are typically issued quarterly but can also be disbursed monthly or annually. Distributions are announced in advance and determined by the company's board of directors. Companies pay dividends for a variety of reasons, most often to show their financial stability and to keep or attract investors.
How often should dividends be paid? ›
When can my company pay a dividend? There are no rules about how frequently dividends can be paid, but most businesses distribute them quarterly or every six months after working out how much the company can afford to pay.
What are the best dividend funds for the Motley Fool? ›
The Motley Fool has positions in and recommends Amazon, Chevron, EOG Resources, Home Depot, JPMorgan Chase, Meta Platforms, Microsoft, Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF, and Walmart.
Do you get dividends every day? ›
Dividends on most dividend paying stocks are paid quarterly, with a few that pay semi-annually, and a few that just pay once a year. There are some stocks, not many, that pay monthly, but they usually are actually REITs, MLPs, and ETFs. However, interest on bonds does accrue on a daily basis.
What are the best stocks that pay monthly dividends? ›
7 Best Monthly Dividend Stocks to Buy Now
| Monthly Dividend Stock | Market capitalization | Trailing-12-month dividend yield |
|---|
| Permian Basin Royalty Trust (PBT) | $555 million | 5.8% |
| PennantPark Floating Rate Capital Ltd. (PFLT) | $701 million | 10.8% |
| Agree Realty Corp. (ADC) | $5.9 billion | 5.0% |
| Dynex Capital Inc. (DX) | $775 million | 9% |
3 more rowsMay 6, 2024
10 Best Dividend Stocks to Buy
- Verizon Communications VZ.
- Johnson & Johnson JNJ.
- Altria Group MO.
- Comcast CMCSA.
- Medtronic MDT.
- Duke Energy DUK.
- PNC Financial Services PNC.
- Kinder Morgan KMI.
With a 10% yield and monthly payout schedule, you can get to $500 a month with only $60,000 invested. That is, $6,000 per year paid on a monthly basis. Unfortunately, most stocks don't have yields anywhere near 10%. Many do have high enough yields to get you to $500 a month with diligent savings, but don't pay monthly.
Do I pay tax on dividends? ›
It is taxed accordingly at your usual rate of income tax, but the 'personal savings allowance' can mean all, or a portion of this, is tax free – there's more information on this from the HMRC website here. For funds with less than 60% in fixed income investments, any income will be classed as dividend.
How much money do you need to make $1000 month in dividends? ›
In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments. How Can You Make $1,000 Per Month In Dividends? Here are the steps you can take to build yourself a sufficient dividend portfolio.
The Coca-Cola Company's ( KO ) dividend yield is 3.09%, which means that for every $100 invested in the company's stock, investors would receive $3.09 in dividends per year. The Coca-Cola Company's payout ratio is 73.72% which means that 73.72% of the company's earnings are paid out as dividends.
Who is the best dividend investor of all time? ›
Warren Buffett is widely considered the greatest investor of all time, and much of his investment strategy relies on collecting dividend payments.
Which index fund pays the highest dividend? ›
7 high-dividend ETFs
| Ticker | Name | Annual dividend yield |
|---|
| SPYD | SPDR Portfolio S&P 500 High Dividend ETF | 4.56% |
| FDL | First Trust Morningstar Dividend Leaders Index Fund | 4.43% |
| SPHD | Invesco S&P 500® High Dividend Low Volatility ETF | 4.32% |
| SDOG | ALPS Sector Dividend Dogs ETF | 4.22% |
3 more rowsMay 1, 2024
In most cases, stock dividends are paid four times per year, or quarterly. There are exceptions, as each company's board of directors determines when and if it will pay a dividend, but the vast majority of companies that pay a dividend do so quarterly.
How much to invest to get $1000 a month? ›
Required investment
Hundreds of thousands of dollars are required to generate $1,000 every month from dividend stocks. For regular investors who don't have that much capital, be ready to invest time in accumulating stocks to reach the desired amount.
How long should I hold a stock for dividends? ›
Investors must have bought the stock at least two days before the official date of a dividend payment (the "date of record") in order to receive that payment. The company pays out the dividend to shareholders.
How long do you have to hold a stock to get the dividend? ›
If you buy a stock one day before the ex-dividend, you will get the dividend. If you buy on the ex-dividend date or any day after, you won't get the dividend. Conversely, if you want to sell a stock and still get a dividend that has been declared, you need to hang onto it until the ex-dividend day.
What are the three important dates for dividends? ›
When it comes to investing for dividends, there are three key dates that everyone should memorize. The three dates are the date of declaration, date of record, and date of payment.
How do I find my next dividend date? ›
Dividend declarations often accompany earnings announcements. Existing shareholders receive the declaration information directly from the company, usually by a notice in the mail. Investing information websites regularly publish upcoming ex-dividend dates, along with the amount of the dividend.
How often does Coca-Cola pay dividends? ›
The Company normally pays dividends four times a year, usually April 1, July 1, October 1 and December 15. Shareowners of record can elect to receive their dividend payments electronically or by check in the currency of their choice.
