When it comes to getting the benefits of dividends, there are a few dates to keep in mind.

Dividends are paid on the payment date. This is set by the board of directors and, ultimately, the shareholders. This is the date the dividend checks or electronic payments are sent to eligible investors.

Other important dates to remember:

• • Declaration date — This is when the next dividend payment is announced by the company.

• • Record date — This is when the company looks at its records to see which shareholders are eligible for the dividend.

• • Ex-dividend date — After this date, you can no longer purchase the stock and receive the upcoming dividend. The ex-dividend date is typically the second business day before the record date. If you want to receive a dividend payment for a particular stock, you need to purchase it at least three business days before the record date. This is because it takes three business days for a stock purchase to be settled and officially put on the company’s books.

Good to know
Dividend-paying securities purchased too close to the payment date are not considered “qualified dividends,” and are taxed at a higher rate.