Sunday, March 24, 2013

Terminology Explained: Ex-Date

One of the ways in which you can earn in Stock Market is through Dividends. So if the company you invested or planning to invest with declares a dividend, make sure you take note of this very important date - EX- DATE. (See more about dividends.)

Let's see some definitions of Ex-Date in different sites:
Taking directly from Investopedia, it is the date on which a security is traded without a previously declared dividend or distribution. After the ex-date, a stock is said to trace ex-dividend. It is also explained in their site that this is the date on which the seller, and not the buyer, of a stock will be entitled to a recently announced dividend. The ex-date is usually two business days before the record date.

While according to Investorwords, the ex-date was created to allow all pending transactions to be completed before the record date. If an investor does not own the stock before the ex-date, he or she will be ineligible for the dividend payout.

To make it easier to understand, let's have an example. Last year, SMPH declared giving out 25% stock dividends with an ex-date of May 21, 2012. So only those who have stocks before May 21, 2012 will get the dividends. If an investor has 1000 stocks before May 21, 2012, he was given 250 more stocks on the payable date which is June 20, 2012. I thought of including this in my blog because last year, I bought more stocks of SMPH hoping to get more stock dividends. When payable date came, I didn't receive what I am expecting to get because I bought the additional stocks on May 21, 2012. So the next time you are aiming to  get dividends, make sure to look at the Ex-Date.

One of the dividends I am expecting now is from Metrobank (MBT). It declared a cash dividend of 1.00 per share.

Since the ex-date is March 5, 2013, those who bought their shares in MBT on that date will not be eligible for a dividend.Those who have their shares until March 4, 2013 is entitled for dividends and will receive dividends on April 3, 2013 based on the Payment Date declared on the news details above.

P.S. MBT is one of the suggested stocks of Truly Rich Club. If you want to know more about the club and what it can do to help you while you start investing in Philippine Stock Market, click on the link below. You can also download a free ebook "My Maid Invests in Stock Market and Why You Should Too" in the link.

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