Topic: How To Invest

Companies that pay dividends have a “record” date. Does that determine who owns the stock on that day and who gets the dividend? If so, why not buy stock the week before the day of record, collect the dividend and then sell the stock? I know this would encourage churning, but for high-yield stocks, it could prove profitable.

Article Excerpt

There are a number of dates related to the payment of dividends. Several weeks in advance of a dividend payment, a company’s board of directors sets the amount and timing of the proposed payment. The date of that announcement is known as the declaration date. The payable date is the date set by the board on which the dividend will actually be paid out to shareholders. However, only shareholders who hold the shares before the payable date will receive the dividend payment. That date is known the record date, and is set any number of weeks before the payable date. Recent examples include TransCanada Corp.’s dividend of $0.40 a share payable on Friday, July 30, 2010 to shareholders of record at the close of business on Wednesday, June 30, 2010. Two business days before the record date (Monday, June 28, 2010 in the case of the TransCanada dividend), the shares begin to trade without their dividend. This date is the ex-dividend date. If you…

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