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Dividends.....how long do you need to hold a share for?

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Is there a rule as to how long you should have been holding the share for before you qualify to be paid a dividend. What if you buy a share the day before the payout is due? Would you get paid? If so, is there somewhere I can find out when a dividend is due to be paid out?

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Is there a rule as to how long you should have been holding the share for before you qualify to be paid a dividend. What if you buy a share the day before the payout is due? Would you get paid? If so, is there somewhere I can find out when a dividend is due to be paid out?

Don't think there is any specific rule as such, but you usually need to be registered as a shareholder with the company at a certain date before the dividend is due. Below is an example from a company that will not be paying any further dividends for a long time, Northern Rock.

 

Who is eligible to receive a dividend?

 

A dividend is usually paid to shareholders with a registered share balance named on the register on a specific date known as the record date. The record date is normally about one month before the next dividend payment is due and will therefore be communicated as part of the Interim Results and Annual Results, normally announced in July and January respectively. Shortly before the record date is the ex-dividend date. If shares are sold on or after this date, the person selling the shares will retain the right to receive the dividend payment. Alternatively, if a person purchases shares on or after this date, they will not be entitled to receive the dividend payment.

 

http://companyinfo.northernrock.co.uk/shar...faqs.asp#iFAQ12

 

So, find your favorite divi payers, keep an eye for the interim or final date and then see what the company announces as to the date you qualify, ex-dividend.

 

If you going to try and take advantage of getting a dividend by buying to get on the register and then selling after the dividend is paid, beware that often after a payout the share price of the company will fall to reflect the amount of money taken out of the business to pay the dividend. Also, if the market is not happy with the interim or final results, you can find the share price will fall to reflect that. You might get a decent dividend but lose on the capital invested before you get the chance to sell. The obvious answer is to paper trade it and see if it works as a strategy.

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