Ex-dividend date **

Dividends can be confusing. I've read all kinds of advice online about what to buy and when to buy it. And I have to admit that I have followed some of this advice and none of it has worked out. The lesson here is that you should always analyze what is best for you and not for a hypothetical person.

As far as dividends go, the fact is that even if the stock price drops on the ex-dividend date, it doesn't mean you can't buy before the ex-dividend date and make money. The key is to understand the dates surrounding the dividend, i.e. the declaration date, the ex-date, the record date and the payment date. 

The declaration date is when a dividend is declared. It is often scheduled as companies tend to pay quarterly or monthly dividends, but it is not set in stone until it is declared. This is also the date when you will know how much you will be paid. Again, there are usually projected figures, but these can change. However, sometimes, after doing extensive research on a company, it is worth betting on a particular payout, as it allows you to buy shares in advance and potentially take advantage of a lower price before it starts to climb as a result of an attractive payout.

The ex-dividend date is particularly important for investors. Only those who own the stock on that date will receive a dividend. An important nuance is that this ownership must exist on that day, even during the pre-market trading session. Later in the day, it is entirely possible to sell the stock and still get paid.

The record date is usually one business day after the ex dividend date. This is the date on which companies receive the records of the shareholders to be paid.

Finally, the payment date is the date the dividend money (or other valuables) will be transferred to your account.

Did I say "other valuables"? Yes, dividends can also be paid in stock. This isn't always great if you've bet on a high dividend and hope to get rid of the stock immediately. However, this practice is more common when the dividend is high and the company expects a sell-off. Thus, 25% dividends are not always a good deal. 

Finally, there is a rule against trading in very high dividend paying stocks around the ex-dividend date. This rule is also necessary to stabilize the price.

** Note that this information is by no means complete and is subject to change at any time. Make sure you understand all the important trading rules before betting on high dividend returns.