Timing of dividends

[LakeRat1]

Question --- I have our investments in IRA/Mutual Funds at Fidelity --- I am wondering if I move the investments to more bond secure funds, will I still get the dividends through the end of the quarter/year if I no longer have any $$$ in said funds? ---- I have never known if you get paid through a certain day or the investments need to stay until the end of the quarter??

 

[VanWinkle]

Question --- I have our investments in IRA/Mutual Funds at Fidelity --- I am wondering if I move the investments to more bond secure funds, will I still get the dividends through the end of the quarter/year if I no longer have any $$$ in said funds? ---- I have never known if you get paid through a certain day or the investments need to stay until the end of the quarter??

Funds have declaration dates for dividends. If you are the owner of the fund on that date, you will get the dividend. On bond funds, it is accrued by how long you own the fund and paid usually at the end of the month. Remember the dividend is like a forced distribution as the value of the fund drops to match the dividend. It is not really a concern, other than taxes, for when to sell the fund and move to bonds.

 

[kaneohe]

https://www.investor.gov/additional...vidend-dates-when-are-you-entitled-stock-cash

I always get confused by all the different dates. You can learn for yourself...............but as Van Winkle suggests, if you get the dividend you are not necessarily better off since the dividend + share price will be no different than the share price before (ignoring market effects) and you will have a dividend that will be taxed. Might be better to not get the dividend.

 

[pb4uski]

Question --- I have our investments in IRA/Mutual Funds at Fidelity --- I am wondering if I move the investments to more bond secure funds, will I still get the dividends through the end of the quarter/year if I no longer have any $$$ in said funds? ---- I have never known if you get paid through a certain day or the investments need to stay until the end of the quarter??

No, since you won't be a shareholder of record on the declaration date. But you don't get shortchanged because the value of the dividends is included in the NAV that you receive when you sell, because any fund cash is included in the NAV.

 

[MRG]

No, since you won't be a shareholder of record on the declaration date. But you don't get shortchanged because the value of the dividends is included in the NAV that you receive when you sell, because any fund cash is included in the NAV.

+1

 

[LOL!]

On bond funds, it is accrued by how long you own the fund and paid usually at the end of the month.

Many bond funds work that way, but many do not. You have to read the prospectus to find out or have the personal experience or maybe even call a sales rep who can tell you.

Also bond exchange-traded funds do not work that way.

For the bond funds that don't give you a pro-rated dividend for the part of the month that you held your shares, the dividend value is embedded in the share price just like it is with stocks.

In other words, no one is ever ripped off in the USA when it comes to whether they get their share of any dividends.

I have never known if you get paid through a certain day or the investments need to stay until the end of the quarter??

You don't have to know because you get paid the accrued value of the dividend no matter what. Basically, don't make any investing decisions based on a dividend. See also: https://en.wikipedia.org/wiki/Dividend_puzzle

 

[LOL!]

And nobody ever understands record date or declaration or payable date, but they do understand ex-dividend date.

If you buy the shares on the ex-dividend date or later, you don't get the dividend even if you own the shares.

If you sell the shares on the ex-dividend date, you get the dividend even if you no longer own the shares.

 

[LOL!]

One can make a case for some taxpayers to avoid dividends in a taxable account even if they pay no taxes on dividends because they are in a low tax bracket, too.

There are some "cliffs" that people have heard about. If one gets dividends in a taxable account, then they contribute to one's adjusted gross income. But suppose one has $300,000 in carryover losses and is about to get $10,000 in dividends. If one sells before the shares go ex-dividend, then any capital gains would be offset by the carryover losses and the AGI is not increased by $10,000.

 

[LOL!]

No, since you won't be a shareholder of record on the declaration date.

Careful! In most instances the declaration date is not the record date nor the ex-dividend date nor the payable date.

The declaration date is just the date that those other dates are confirmed AND the amount of the upcoming dividend that will be paid. It could be a day or days or weeks or even months before the actual ex-dividend date. It is the date that the amount of the dividend is declared so that investors can make decisions whether to sell, buy, or hold before the next dividend is paid out to shareholders of record.

 

[LakeRat1]

Thank You Very Much

 

[pb4uski]

Careful! In most instances the declaration date is not the record date nor the ex-dividend date nor the payable date .....

I miswrote, I meant the record date and not the declaration date... as I recall dividends are paid to shareholders of record as of a specified date.

 

[VanWinkle]

I miswrote, I meant the record date and not the declaration date... as I recall dividends are paid to shareholders of record as of a specified date.

I miswrote as well, it is the Ex dividend date that counts, not the declaration date.

VW

 

[LOL!]

..., I meant the record date and not the declaration date... as I recall dividends are paid to shareholders of record as of a specified date.

That is true. But the issue is that since there are different settlement times for different kinds of investments, using the record date is problematic.

The ex-dividend date is calculated backwards from the record date taking into account the settlement time for that particular investment. That's why I think many people believe the ex-dividend date is the best way to know if they will get a dividend. Of course, the ex-dividend date is not the payable date, so the dividend doesn't show up on the ex-dividend date unless the brokerage advances one the money from the dividend.

And a place like Vanguard doesn't put "ex-dividend date" in its mutual fund online pages like it does for its ETFs and like other fund companies do. Shame on Vanguard.