It’s fun to buy stocks that pay a dividend monthly, four times a year or annually. Who doesn’t like to get paid without going out to work?! Another benefit that is often overlooked is that the dividend payment may increase your willpower to stick with a good stock even if it is beaten down temporarily along with the rest of the market. Before buying a dividend-paying stock, I usually check on the yield, payment frequency and ex-dividend date. Then I place my buy order. Here’s how you can use your CIBC Investor’s Edge account to get the facts.
Danger! Dividends are NOT Guaranteed. Time for More Research.
Sometimes the listed dividend seems astounding. Perhaps the stock is paying an Indicated Annual Dividend of $4 and the share price is $20. That sounds fabulous. Or does it?
Companies can change their dividend payment whenever they want, with no advance notice, and can even stop paying altogether. Buying a dividend-paying stock is not comparable to buying a GIC or a term deposit.
If a company has been paying dividends regularly for years, Investor’s Edge will be able to find and report the annual dividend is fairly easily. Some businesses, however, only pay dividends sporadically. Their dividend could be reported as if it’s guaranteed to continue. Be wary!
If dividend payments matter to you, and will influence your decision to buy a stock, please visit the company of interest’s own website. Look for their Investor Relations page. Find their Dividend History information. Have they been paying dividends steadily? Has the amount of the dividend payment been consistent, preferably growing, or wildly variable?
If you can’t find much information on the company’s site, that should be a warning. LNF, for example, pays a regular quarterly dividend. From time to time, it also pays a bonus dividend if the company’s success has been remarkable. It’s not a business, however, which is very interested in its shareholders. Finding information about its dividend history and payment plans often requires reading its news releases. It’s a good company to consider holding but not if the dividend must be predictable for you to consider a purchase.
Dividend Yields Are Percentages and Therefore Can Confuse
A Dividend Yield is not the same as an annual interest rate, even if it is expressed as a percentage. When share prices go up, dividend yields go down. If the price tanks, the yield rises. So what you see listed is not necessarily what you will get. What you get depends on the price you pay for the stock. If you only want a stock if the yield is, say, 4% or higher, you should consider using a limit order and set a maximum price you are willing to pay per share.
High yields (over 5%) are not normal. If the yield is very high, a dividend cut may be looming. Is the company going to continue paying such a high dividend if its stock value is so low?
In theory, there is a price drop both the first trading day after the stock goes Ex-dividend and the day the dividend is paid. You may want to wait and buy on one of those days. Market conditions could eliminate any dip with no warning, however.
Will You Get the Next Dividend?
If a stock pays a dividend monthly, missing the next payment by buying one day too late stings but only like a mosquito bite. Missing the next annual dividend payment by one day stings like a horsefly bite.
So if it’s of interest, check the Ex-dividend Date before buying.
You must have your purchase order filled BEFORE this date to receive the next dividend. So if it is May 29 and the Ex-Dividend date is May 29, you won’t get the next dividend payment if you buy today.
Note: The actual day you will get the dividend payment is not listed on this screen. It’s not uncommon for dividends to be paid a month or even two months after the ex-dividend date. If it matters when you will get paid, read the press releases for the company, or go to the company’s website and check Investor Relations section for info.
Why the Dividend Frequency Might Matter
If you are building an income-producing portfolio, you may find the dividend frequency important. A company paying an annual dividend may be less suitable to you than one that pays monthly.
Unfortunately, unlike InvestorLine, Investor’s Edge does not report the dividend frequency directly. Instead you have to do a little mental math.
If the Latest Dividend, for instance, was $1 and the Annual Dividend is $4, it appears to pay quarterly.
To be sure, however, you will have to visit the company’s website and check.
How to Check the Dividend Yield, Timing and Ex-Dividend Date to See if You Will Get Paid the Next Dividend
- Go to CIBC Investor’s Edge at: https://www.investorsedge.cibc.com/ie/
- To sign in to your CIBC Investor’s Edge account/s:
- In the User ID field, type your User ID.
- In the Password field, type your password.
- Click on the Sign On button.
- From the list on the left side, click on Quotes and Research, then click on Market Centre.
- In the Symbol field, type the stock exchange code for the company you are interested in.
For example, I typed TD.
- Click on the View button.
- In the facts box, it should list:
- Latest Dividend
- Ex-Dividend Date
- Annual Dividend
- Unlike BMO InvestorLine, it does not state the Dividend Frequency. You can estimate it by comparing the Latest Dividend with the Annual Dividend. To be certain, however, you will need to check another source.
- When you are finished reviewing the dividend information, click on the Sign Off link.
- For increased security, close your browser session.
You probably won’t buy many stocks just because of their dividends. The dividend might, though, play an important role in sorting through similar stocks. The CIBC Investor’s Edge Market Centre information is a useful place to start the comparison but check the companies’ own websites to get the details.
- How to Place an Order to Buy Shares with CIBC Investor’s Edge
- How To Get Ready to Buy Shares of Stock in a Company Through a Self Directed Account
- Review the Pricing History for Shares of a Company’s Stock Using CIBC Investor’s Edge
- Reviewing Your CIBC Investor’s Edge Account Holdings
Before you buy a dividend-paying stock what do you review? Please share your experiences with a comment.