Dividend payout is the process of receiving earned dividends. First, you need to buy a stock, ETF, REIT or other that pays dividends. Then, you need to hold that instrument past the ex-dividend date (explained below). Lastly, you will receive a ticket in your broker account, specifying the dividend payout.
If you have not investigated how dividends work, it is recommended to first read up on what dividend is.
Buying a dividend instrument
If you have not bought a dividend instrument yet, then do this first. You can buy such instruments in a broker account. Usually, two types exist dividend distribution and dividend accumulation.
Most instruments distribute the dividend to their holders. This is when a dividend payout can occur. However, instruments can accumulate dividends to automatically reinvest and in this case, the investor won’t notice it.
Holding an instrument for dividend payout
The second part is the easiest. Now, all you need to do is hold the asset. In other words, do not sell. At least, not until the ex-dividend date. This is when the company registers all holders of the instrument, that should receive dividends.
Reaping dividend benefits
Finally, you will receive a pop-up, notification, email or otherwise from your broker. In this message, it will state:
- If you get cash or stock dividend
- How many instruments are eligable
- Ex-dividend and record date
- Payout date (Note, this is usually a few weeks after the record date)
- Dividend frequency
- Taxed value on dividend pre-payout
All in all, one of these pop-ups could look something like the below:
