When a public listed company turns a profit, it has two options. It can reinvest the profit in the business via reducing debt, buying back shares or expanding its business. Alternatively, it can pass its profits along to its shareholders. This is called a dividend. THE DIVIDEND-PAYING PROCESS Whenever a company elects to pay dividends, the decision has to be approved by the Board of Directors. This process has four key milestones that investors should note: * Declaration Date This is the date when the dividend payout is announced. The dividend to be paid is recorded as a liability in the business’s accounts and paying the stockholders becomes an obligation. The next two dates below are determined on the declaration date. * Ex-Dividend Date This is the cutoff date by which an investor must become a shareholder to be entitled to the dividend. An example: Company A announces a dividend for its shareholders. If you purchased ......