Topic
Dividends
Ex-dates, record dates, taxes, reinvestment and the income a portfolio can produce, with the sums shown.
Dividends look simple until the dates and the tax rules meet. A payment depends on owning the shares at the right close, its tax rate depends on how long you held them around the ex-date, and the stock price adjusts on the morning it goes ex. The pages here take those mechanics one at a time.
For a portfolio built around income, the dividend income course goes from how a payment reaches you to building the portfolio, and the two dividend calculators do the compounding and the income sums.
Courses
- Dividend Income Portfolio: Building One That Pays You
4 lessons · Beginner. Investors who want a stock portfolio that produces regular cash, whether they reinvest it now or plan to spend it later.
Analysis
- Dividend Growth vs High Yield: When a Growing Payout Wins
A growing 3% yield passes a flat 6% yield in annual income by year 9 and in total by year 15, so the choice turns on your horizon and on growth holding up.
- Special Dividends Tell You Little About Next Year's Payout
Yields that include a special dividend overstate future income, so judge a stock on its regular dividend and count specials as variable.
- Dividend Capture Rarely Survives the Ex-Date Price Drop
Dividend capture mostly swaps share price for dividend income taxed at ordinary rates, so own dividend stocks for the payout over time.
- Should You Reinvest Dividends? Yes, Unless You Have a Reason
Automatic dividend reinvestment should be the default; switch it off for income needs or concentration, never on the belief that it avoids tax.
Explainers
Glossary
- Dividend growth rate
The annualized rate at which a company's dividend per share has grown over a stated period, calculated as a compound rate from the starting and ending annual dividends.
- Dividend reinvestment plan (DRIP)
An arrangement that uses each cash dividend a stock pays to buy more shares of that same stock, often in fractional amounts, without the holder placing an order.
- Ex-dividend date
The first trading day on which a stock trades without its declared dividend, so a buyer on or after that date does not receive the upcoming payment.
- Qualified dividend
A dividend that meets IRS requirements to be taxed at long-term capital gains rates, which are 0%, 15% or 20% at the federal level depending on taxable income.
- Record date and payment date
The record date is when a company fixes the list of shareholders entitled to a declared dividend; the payment date is when the cash is actually paid to them.
Calculators
- Dividend Reinvestment Calculator
Shares and income over the years with dividends reinvested, against taking them as cash.
- Dividend Income Calculator
The portfolio a target income needs at a given yield, before and after tax, or the income a portfolio pays.