There are various ways you can be paid for your dividends. However, the two major areas are cash and stock. Most people prefer cash dividends rather than stock. This money is generally given to the stockholder from the corporation’s earnings or profits. The stock dividend pays additional shares of the companies stock instead of cash.

There are four major dates involved in a companies process of paying dividends:
Declaration Date - This is the date that the companies board of directors sets as the time when the company will pay the dividend. This is announced to the shareholders and the market in general.
Ex-Date or Ex-Dividend Date - If you buy a dividend stock prior to this date even up until the day before you will still receive your dividend. However, if you buy on this date or later you will not get the dividend. The same applies if you decide you want to sell a stock and receive a dividend. The ex-date is the second business day before the date of record discussed below.

Date of Record - This is the date when the company checks its records to find out who the shareholders are. You must be listed as a holder of record in order to be guaranteed the right of a dividend payout.

Date of Payment - This is the date in which the company mails out the dividend payment to the holder of the record. This date is usually at least a week if not more after the date of record so the company has accurate time to ensure their records are correct.

Ex-dividend dates are used to ensure the right checks are being sent to the right people. In the modern stock market it takes three days from the purchase of a stock for the change to be listed in the companies record books.

As stated above if you are not in the companies record books on the date of record you won’t get a dividend payment from the company. Therefore, in order to receive payment you need to buy the stock at least three days before the date of record. This is the day before the ex-dividend date.