When companies declare a dividend, they choose the amount per share, the date the stock will go ex-dividend, and the date payment will be made to shareholders of record.
Vanguard, iShares and Schwab make their ETF dividend payments just four business days after the ex-dividend date.
The answer may shock you, because it will be six weeks after the ex-dividend date.
Most major ETF sponsors now pay their dividends within a week of the ex-dividend date.
Stock prices readjust on the ex-dividend date to reflect the pending payment, and there is no guarantee the shares won't slip below the trader's breakeven point, resulting in losses.
WSJ: Running With Scissors: Another Way Dividends Can Boost Your Stock Portfolio
In January, at an investor's conference one day before its ex-dividend date, Verizon indicated that the 2009 full-year earnings it was soon to report would fall short of analysts' estimates.
WSJ: Running With Scissors: Another Way Dividends Can Boost Your Stock Portfolio
Mr. Jackson's bet: that, because the strike price entitled an investor to own Kimberly-Clark shares at a price lower than the stock's current market price, the investor who bought the call options would exercise the contracts before the ex-dividend date to capture the company's 60 cent-a-share payout (recently increased to 66 cents).
WSJ: Running With Scissors: Another Way Dividends Can Boost Your Stock Portfolio
If you do wish to account for this, enter the value of the dividend payment with a negative sign on the date a stock goes ex-dividend, and add the number back in when the dividend is received.
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The chart below shows the cumulative average outperformance 40 days before and 40 days after the ex-date among dividend-paying stocks in Europe, Middle East and Africa (EMEA) countries.
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Warning: To get the new 15% rate, you must hold a stock for 61 of the 120 days surrounding the date it goes ex-dividend: that is, starts trading without an upcoming dividend attached.
The ex-date is the day on or after which a security is traded without a previously declared dividend or distribution.
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