Question

On February 14th ..... you purchase 10,000 shares of DANA Inc. from a stockholder, Jane Smith.

In accord with the data above you expect to receive a dividend from DANA Corporation on March 19th.

Jane disagrees. She declares " the owner of the stock at the time the dividend is declared is entitled to receive the dividend".

Jane further declares "since I owned the stock when the profits were earned, it is only fair that my fair share of those profits (the dividends).

Is Jane correct? Please explain.

Answer 1

Not clear what is the ex-dividend date in this case.

The ex-dividend date for shares is usually one business day before the record date. If you have purchased the shares on its ex-dividend date or after, you are not entitled to receive the next dividend payment. Instead Jane would get the dividend.

If however, if you have purchased the shares before the ex-dividend date, you are rightfully entitled to the dividend.

As far as the second reason for Jane's claim is concerned, it is totally illogical and baseless.