How to Invest Before And After Dividend Payment

After a period of operation (usually one year), if the operation is normal and profits are generated, a company will distribute dividendsto shareholders.

There are generally three ways. The most common one is cash dividends.

Another way is to allocate shares to shareholders. The main purpose of this method is to keep the funds in the company and expand the operation. The third wayis product distribution, that is to distribute acompany's products to shareholders as dividends.

Before thedividend payment, four dates deserve shareholders' close attention:

1. Declarationdate. The time when the board of directors of the company publishes the information of dividend distribution to shareholders.

2. Payable Date. The date on which the dividend is officially distributed to shareholders.

3. Record date. The date of recognizing shareholders who are eligible for dividends.

4. Ex-dividend date. The date on which the current dividend is no longer entitled. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date).

Any investor recorded in the record dayshall be recognized by the company as a shareholder and shall be entitled to the dividends paid in the current period.Besides, only when investorsgo through the registration procedures in the registration company before the recorddate can they obtain normal dividends.

The stocks purchased by investors after the ex-dividend date are no longer entitled to participate in the dividend distribution in this period. Generally speaking, the stock market quotation on the ex-dividend day is the ex-dividend reference price, that is, the closing price of the day before the ex-dividend day minus the dividend per share. Understandingthe law of stock price change before and after the ex-dividend date is helpful for investors toplace an order with appropriate entrusted price, effectively reducing costs and losses.

For investors with medium and long-term investment plans, they canbuy the dip, transfer shareholding, and enjoy dividend incomebefore the dividend declaration. However, if investors are bullish on a stock, or if the dividend of a stock is very attractive, investors will rush into buying the stock before the shareholder transfers, which will push the share price higher at the same time.

There is no rule for stock performances before dividend paying period, all trading decisions should be made based on specific company value, stock trend and market sentiment.