Dividends

DIVIDENDS AND PENNY STOCK DIVIDENDS

Dividends:

At times a company may offer a dividend. This will be in the form of cash, shares of their stock or shares of a company being "spun off" another company. When a company files to release a dividend it will file a record date the stock exchanges will then set the ex-date and a payment date will also be set. The important date for you to remember is the ex-date this will normally but not always be set 2 days before the record date. If you wish to qualify for a dividend, you MUST own the stock before the ex-dividend date. If you sell before the ex-date or purchase on the ex-date, you DO NOT qualify for the dividend.

Penny Stock Dividends:

All of the above applies to penny stocks as well but there are many more problems that you can encounter when dealing with penny stock dividends.

Often a company will anounce a dividend in a press release and never file to release the dividend. If the company has not filed the dividend with the Nasdaq then there IS NO DIVIDEND.

Another point of confusion is when a company files to release a dividend and in their press release they state "if you own by a certaind date, the record date, or the payment date you will receive the dividend". THIS IS WRONG. If you don't own on the ex-date the dividend will not be distributed to you. YOU MUST OWN ON THE EX-DATE. I dont know why these companies do this, its either out of ignorance of the market or to create confusion on purpose, but it happens very often.

One trick a penny stock company will often pull is putting out a press release stating there will be a vote on distributing a large cash dividend on a low priced stock. An example would be a company in the .10 range with a dividend coming for .25. This sounds like a great deal but remember the company usually has at least 51% of the votes. While some people are accumulating the stock, creating volume, and driving prices up. These owners are getting rid of shares at a higher price knowing that they will be voting no when the time comes. Obviously once the no vote comes out the price of shares plummet.

If a penny stock is not quoted ex-date. Then treat the record date as the ex-date.