Dividend Capture Explained:

Declaration Date	Ex-Dividend Date	Record Date	Payable Date
8/05/08	9/24/08	9/26/08	10/02/08

August 5, 2008, Company XYZ declares a dividend payable on October 2, 2008,  to its shareholders. XYZ also announces that shareholders of record on the company's books on or before September 26, 2008 are entitled to the dividend. The stock would then go ex-dividend September 24, 2008, two business days before the record date.

This example assumes the record date falls on a Friday. Excluding weekends and holidays, the ex-dividend is set two stock trading business days before the record date or the opening of the market - in this case on September 24, 2008.  This means anyone who bought the stock on September 24, 2008 or after would not get the dividend. However, at the same time, those who purchase before the ex-dividend date of September 24, 2008 would receive the dividend.

The key date to remember for dividend paying stocks fund or security is the ex-dividend date

The key date to remember for dividend paying stocks is the ex-dividend date.  The Record Date, or Date of Record determines the Ex-dividend date, when you must own the stock.

In order for you to receive the upcoming dividend you must already own or you must purchase the stock prior to the ex-dividend date.

It is important to know when you buy or sell stock, there is a three-day settlement (three stock trading days) on all buy or sell orders.

Here is an example:  The ex-dividend date is two stock business days prior to the record date.  To be a stockholder on the Record Date you must purchase the stock before the ex-dividend date.  The latest date you can buy the stock to be a stockholder on record and be entitled to the dividend would be one day prior to the ex-dividend date to allow for the three stock trading day settlement of the stock purchase.  If you purchase the stock the day before the ex-dividend date you would be a stockholder on the record date and would be entitled to receive the dividend payment.

You must be a stockholder on the record date to receive the dividend payment.   

 You do not have to sell the stock after the record date to be entitled to the dividend.  However, you must hold and sell your stock on the ex-dividend date or after to be entitled to the dividend payment.  In this example, assuming that you purchased the stock one day before the ex-dividend date, you would be a stockholder on record date.  If you sell the stock on the ex-dividend date, the buyer of your stock would be a stockholder one day after the record date given the three stock business trading day settlement.  The person that bought your stock would not be entitled to receive the dividend.

You must only own the stock one-day to be entitled to receive the dividend payment.

If you buy before the ex-dividend date, and sell on the ex-dividend date or after, you receive the dividend payment.

Like any trading system, overall market sentiment and momentum is key.  One advantage is that dividend paying stocks do have a tendency to be much more stable and predictable and have the tendency to appreciate in price due to the dividend payment.

Special Dividends, Extraordinary Dividends, Large or Valuable Dividends, Dividends "Not In Kind", and Split-ups Effected as Stock Distributions

When large or valuable cash or stock dividends (usually 20% or more), or a dividend "not in kind" (i.e., a distribution of securities of another issuer), or a split-up is declared, it is the policy to postpone the "ex-dividend" or "ex-distribution" date until the dividend has been paid. The reason for this is so that the stock is not quoted at the substantially lower "ex-dividend" or "ex-distribution" price until the distribution is received by shareholders. If this were not the case, the collateral value of the stock would be reduced between the "ex" date and payment date, and the shareholder might be required to provide additional collateral.

Special Dividend Payment and Holding Requirements

The amount of the Dividend is declared Special or Significant in relation to the stock price.  For this reason the ex-dividend date is set one stock trading day after the payment date.  The stock will trade on an ex-distribution basis, adjusted for the amount of the dividend paid one trading day after the payment date.  The determining factor for a Special or Significant Dividend is usually when the dividend is 20% or greater in relation to the underlying price of the stock/security.

To be entitled to a Special or Significant Dividend you need to be a stockholder on the Record Date.  To be a stockholder on the Record Date your purchase would have needed to be made a minimum of three stock trading days prior to the Date of Record or Record Date.

In the case of Special or Significant Dividends, the stock trades without the dividend from the Record Date, thru the Payment Date, then adjust for the dividend paid and starts trading on an ex-distribution basis one stock trading day after the Payment Date.  To be entitled to receive the dividend, it is required that you be a stockholder on the Record Date and hold your stock thru the Payment Date in order to receive the dividend.  When a Special or Significant Dividend is being paid selling your stock between the Record Date and Payment Date relinquishes your right to the dividend.

The earliest you can sell your stock and still be entitled to the Special or Significant Dividend is one day after the Payment Date, or the date the stock begins trading on an ex-distribution basis.

In the case of dividends "not in kind" (regardless of its size in relation to the listed security), it will be necessary to postpone the "ex-dividend" date in the event a market does not exist in the security to be distributed at the time the listed issue would normally be quoted "ex-dividend".

The "ex" date after the payment date makes it possible for shareholders to sell all of their holdings at one time, on a "dividend on" basis (prior to the "ex" date). As a result, purchasers of the stock prior to the "ex" date continue to pay a "dividend on" price, but will not receive the dividend payment from the company. Accordingly, the "dividend on" purchaser is entitled to receive the dividend from the seller. The seller, in turn, is required to give the purchaser a due bill, covering the amount of the dividend, to be redeemed on the date fixed by the Exchange.