There are advantages to buying stocks that pay a dividend monthly, four times a year or annually. One sometimes overlooked benefit is that it may increase your willpower to stick with a good stock even if its price is driven down temporarily. If you do plan to buy a dividend-paying stock, you may want to check on the yield, payment frequency and ex-dividend date before you place your order to purchase. Here’s how you can use your BMO InvestorLine account to get the facts.
How to Check the Dividend Yield, Timing and Ex-Dividend Date to See if You Will Get Paid the Next Dividend
- Go to BMO InvestorLine at: https://www.bmoinvestorline.com/
- To sign in to your BMO InvestorLine account/s:
- In the User ID or Account # field, type your account number or if you have grouped your accounts under one User ID, type your User ID.
- In the Password field, type your password.
- Click on the Go button.
- Click on the Quotes & Tools tab.
- In the Symbol field, type the stock exchange code for the company you are interested in.
For example, I typed SU for Suncor.
- Click on the Go button.
- In the facts box, on the right hand side, it should list:
- Indicated Annual Dividend
- Dividend Yield
- Ex-Dividend Date
- Dividend Frequency
- When you are finished reviewing the dividend information, click on the Sign Out link.
- For increased security, close your browser session.
Remember Dividends are NOT Guaranteed! More Research may be Needed
You may see an amazing dividend offered. Perhaps the stock is paying an Indicated Annual Dividend of $2 and the share price is $10. Sounds too good to be true! It likely is. Companies can change their dividend payment at any time, with no warning, and can cancel dividend payments with no forewarning. Buying a dividend-paying stock is NOT like buying a GIC or term deposit.
For companies that have been paying dividends steadily for many years, the indicated annual dividend is fairly easy for InvestorLine to find and report. Some companies, however, only pay dividends once in a while. Their dividend may still be reported by InvestorLine as if it is an established fact. BE CAREFUL!
If the dividend is an important part of your decision to buy a stock, visit that company’s own website. Look for their Investor Relations information. Find their Dividend History information. Check whether they have been paying dividends steadily. Check whether the amount of the dividend payment is consistent or wildly different.
For example, CWL is an executive recruitment agency (and other things.) On the BMO InvestorLine Quotes+ screen, today, it says for CWL
- Indicated Annual Dividend: 0.06
- Dividend Yield 7.143
- Ex-Dividend Date Apr 18
- Dividend Frequency Quarterly
Sounds good, right?
Now go to the Caldwell Partners website, Investor Relations page.
Surprisingly, there is no dividend history information tabulated. This should sound a warning bell.
If you look through the annual reports, you will see that in some years they did not pay a dividend.
Next, off to Morningstar to see what they report. They state the Dividend in 2008 was 0.06, but in 2009, 2010 and 2011 it was 0! This is not a reliable steady dividend. Something to consider before buying shares in the company.
Dividend Yields Can be Misleading
Be careful of the Dividend Yield, as well. It looks like an interest rate, but it’s not. If the price of a share goes up, the dividend yield goes down. If the price sinks, the yield grows. So what you see reported is not necessarily what you would get. What you get depends what price you pay at the instant your order is filled. If you are only interested in a stock if the yield is, say, 3% or higher, you may have to put in a limit order to restrict the maximum price you are willing to pay per share.
Also remember that high yields are not normal. If the yield is very high, the company may decide to cut the dividend in the future. Ask yourself whether you think the company can sustain paying such a high dividend if its stock value is so low.
Also remember that for some shares, there is often a dip in price both the first trading day after the stock goes Ex-dividend and the day the dividend is paid. You may want to defer your purchase to one of those days, although market conditions could eliminate any dip with no warning.
When Should You Buy to Still Get the Next Dividend?
If it’s of interest, check the Ex-dividend date. You must have your purchase request filled BEFORE this date to receive the next dividend. So if it is May 29 and the Ex-Dividend date is May 29, it’s already too late to get the next dividend payment.
Note: The actual dividend payment date is not reported on this screen. It’s not unusual for dividends to be paid one month or even two months after the ex-dividend date. If the payment date matters to you, read the press releases for the company, or go to the company’s website and check under Investor Relations.
The Dividend Frequency Can Be Useful
If you are trying to create an income-generating portfolio, you may be quite interested in the Dividend Frequency information. A company that only pays one annual dividend may be less desirable to you than one that pays a monthly dividend.
It’s unlikely that you will buy a stock solely based on its dividend. The dividend, though, can be an important piece of the puzzle of picking between two or three interesting stocks. The BMO InvestorLine Quotes+ information is a good starting place for comparison, but remember to check for more details on a business’s own website to get the entire picture.
- How to Place an Order to Buy Shares with BMO InvestorLine
- 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 BMO InvestorLine
- Reviewing Your BMO InvestorLine Account Holdings
If you’re considering buying a dividend-paying stock what do you consider? Please share your experiences with a comment.