The Smart Investors

Any stock must be held until one day prior to the ex-dividend date in order to receive the dividend. When you purchase the stock on and after the ex-dividend date, you will not get access to the upcoming payment of the dividend. One business day before the record date is normally the ex-dividend date. By being the holder of the stock up to the ex-dividend date, you are guaranteed of receiving the dividend.

That is true, a lot of beginners misunderstand the ex-dividend date, and in so doing they end up losing it. Holding a stock for dividends is not just the short term though, many dividend investors hold on to quality stocks for many years.

I like dividend stocks because they give you a sense of steady reward, but timing is everything. If you buy just before the ex-dividend date, you’ll get the dividend but maybe face a price drop after. That’s why I see dividends as a bonus, not the main reason to buy the stock. I’d rather focus on solid companies with good long-term prospects.