Investing in dividend stocks can be a great way to earn regular, passive income. Some of the best dividend stocks can even yield significantly more than the S&P 500 average.
For example, Chevron Corp. (NYSE: CVX), one of the S&P 500 "Dividend Aristocrats," has a 4.71% yield, which is more than double the S&P 500 average of 2%.
Investing in high dividend stocks like this can be one of the safest, most consistent ways to earn cash from your holdings. And there are many high-yielding dividend stocks out there.
So the biggest question for many new dividend investors is simply, "When do I get paid?"
There are actually four dates that every dividend investor should track.
Today, we're going to explain those to you. After that, we'll show you one of our top dividend stock picks right now.
This first date is important because it determines everything about the dividend itself.
Dividend Dates, No. 1: Declaration Dates
If you pay attention to a company's press releases or earnings calls, you might catch wind of a dividend announcement.
The "declaration date" is the day when a company announces it will issue a dividend, how much it will be, and when it will be paid. This can happen quarterly, if a company has excess earnings and wants to reward shareholders.
A company like Johnson & Johnson (NYSE: JNJ) might announce a dividend hike on this day. Johnson & Johnson is another "Dividend Aristocrat," one of many stocks that have raised their dividend consistently over 25 years.
But this is only a piece of the puzzle. Whether an investor can receive the dividend actually depends on the day they bought in...
Dividend Dates, No. 2: Record Date
The record date is the day you need to own shares of a stock by to get the dividend payment.
If you invested in a stock on June 30, but the "date of record" for a quarterly dividend was June 28, you are not entitled to receive the dividend for that quarter.
For example, lets say Walmart Inc. (NYSE: WMT), another Dividend Aristocrat, announces a $2.20 per share dividend at its next earnings call (a $0.08 hike from its current dividend). Walmart will determine which investors are eligible to receive the $2.20 by establishing a record date for that dividend. Investors who bought in before the record date will receive the $2.20 on the date the company decides to pay it.
But looking at this next date is arguably more important, because it's possible to buy before the record date and still miss out on the dividend...
Dividend Dates, No. 3: Ex-Dividend Dates
The ex-dividend date is often confused with the record date. But the only difference is that the company sets the record date, and the stock exchange sets ex-dividend dates each quarter.
They are usually set a day earlier than the record date, giving stock trades two business days to settle.
All that means is if the record date on a stock is June 28, but the ex-dividend date is June 27, an investor that buys on June 27 is still not entitled to the dividend. June 26 would be the last day to buy.
So it's important to look at the ex-dividend date before the record date to determine your income.
Finally, here's the most important date of all.
Dividend Dates, No. 4: Dividend Payout Date
Dividend payout dates are simply days shareholders get paid. You can receive your dividend by mail or wire.
The company will announce a dividend with a dividend payout date after looking at its earnings. Any shareholders who bought the stock before the ex-dividend date are entitled to the dividend.
And that's it. Those are the most important bits of stock dividend information you need to know. Of course, there's plenty more to learn, including which dividend stocks are the most valuable and reliable.
We're sharing one of our favorites right here - it's one of the most generous dividend-paying stocks today...
"One of the Most Aggressive Dividend-Payers in the Market"
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Kinder Morgan Inc. (NYSE: KMI) has more than 83,000 miles of pipeline across North America, making it one of the top midstream infrastructure companies on the continent.
As such, the company was able to hike its dividend by a staggering 25% in the last two years. And that's in the cards for 2020 as well. Quarterly, that means investors go from $0.125 to $0.3125.
The midstream energy business likes dividend hikes. Kinder Morgan raised its dividend 70% between 2011 and 2015. But a downshift in energy prices and demand shrunk earnings temporarily.
Now, however, with the American midstream sector accelerating, this company is going back to hiking dividends.
You can pick it up for $21.13. And in addition to the reliable dividend, analysts give this stock a $26 price target. That's solid 23% upside for today's investor.
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