This is the summary of Episode 8 of our Roaming Returns Podcast.
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Podcast Summary
Easiest Place to Find the Ex-Dividend Date
The easiest place to find a stock’s ex dividend day is Yahoo Finance. You type in any ticker in Yahoo Finance, and the ex dividend is right there in the right column as shown below.
The Dividend Process
The dividend process actually goes through three different dates if you read a company’s reports, which are boring.
During their earnings report, they announce a dividend declaration date and state how much they’re going to pay for the next dividend. Since earnings reports are quarterly, you may see several dates if the dividend is paid out monthly.
Then they set their ex-dividend date. This is the date that as long as you’re holding the share before that date, you get paid the dividend.
If you buy on or after the ex dividend date, you actually don’t get paid until the following dividend payout. This isn’t a big deal if you’re buying a stock with a monthly payout. But it will have bigger impact if it pays quarterly more less frequent.
The record date is the date they review their records to determine who’s a listed shareholder.
You don’t really need to worry about the declaration date or the record date. The ex-dividend is really the only one that matters.
How the Ex-Dividend Date Affects Stock Prices
On the ex-dividend date, the stock’s price is going to drop by whatever the dividend is. Some re-correct in price over a short time while others can take weeks. Look at the history as an indicator.
If you don’t have a lot of money right now to invest, you can turn off the automatic reinvestments (DRIP) and manually stagger share purchases after ex-dividend dates until you have more money. But that might get tedious fast.
You can get some really big price discounts on stocks that pay annually if you wait until this happens before buying. But you will miss the dividend until the following year.
Dividends Frequency Impacts Yearly Interest
We don’t personally buy stocks with annual dividends mostly because we want equal monthly payouts for consistent cash flow and it’s hard as hell to do that with annual payers.
Another reason we prefer monthly dividend payers because of the rule of compounding. 12 is better than 4 even if the total payout is the same. Your money grows faster the more times it’s able to compound in a year.
This article does a good job summing things up. I’ve recreated the comparison in the chart below. It doesn’t look like much when you don’t have a lot of money, but it stacks more and more with time especially with shares compounding at lower prices.
You can also get a quick estimate using this calculator.
Budgeting Tips
When you don’t pay attention to what you’re spending your money on, it’s easy to spend more than you earn. All those little things don’t seem like much until you add them up.
That’s how people overspend month after month. Get intentional and keep track of your income and expenses so you can build up your investing account instead of going into debt.
Convenience eating is a big one for us. Tim has a Chipolte habit… among many other things.
He’d probably eat Chipolte every day if he could. He contends that we’d actually save money on food by eating it every day. We are going to do this challenge at some point. Carmela would get tired of the same thing pretty fast.
If you know, somebody that works at Chipotle and they want to sponsor a podcast let us know!!
Ways to Earn Extra Money
We’re always looking for easy ways to make extra money to either save more to invest or give our investments time to compound and grow. This is a great strategy to grow you passive income, especially when the markets are down.
We donated plasma for several months to pay for a trip to Greece. After learning how much money these companies make on selling your bodily fluids, it’s a total rip off for the pain and suffering you go through.
They only pay you $25-$40 and they sell your plasma for like $400 because people are in desperate need of life-saving medicines. If you do this or donate blood, we highly recommend watching this documentary. It might not be such a good thing after all.
I hope we aren’t the only ones disgusted by these companies preying on the desperation of people. If you’re motivated to do something to change this, let us know how we can help.
Instacart is way easier and less painful way to make money. You can easily make $100 a day, so it’s not hard to reach the goal of finding an extra $100 to $500 a month.
Robinhood Allows You To Buy IPOs
The easiest way to buy IPOs (Initial Public Offerings) is on Robinhood if you’re interested in that. We don’t recommend this personally.
- Instacart ($28/share)
- ARM ($49/share) are going IPO this week
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