Do you also believe these Dividend Investing myths?
- Ex-dividend vs Record Date
Many investors use these 2 terms interchangeable and assume that they are the same date. However
they are not.
If an investor owns a stock before the ex-dividend date, they will receive the dividend. Since the ex-dividend date is usually two business days before the record date, an investor needs to understand the difference between the two.
- Stock prices drop whenever dividends are paid
Most investors assume that stock prices drop when dividends are paid out to shareholders. Hence they will treat such situations as a potential chance to start investing in their desired stocks.
However, that is not the case.
Stock prices tend to dip on the ex-dividend date rather than on the dividend payment date.
Also, you might want to note that often times these dips may not be very obvious. Especially if the dividend payout is a small or negligible amount......