Candidates preparing forelephant_money_origami FINRA exams should be familiar with dividends, and the relevant dates surrounding the dividend process.  Let’s begin with the definition of a dividend, it is a distribution of an issuer’s profits, decided by the board of directors, to its shareholders.   Dividends can take different forms, for example:

  • Cash: e.g. $0.25 per share,
  • Additional shares of the issuer’s stock: e.g. a 10% stock dividend will result in receipt of one additional share for each ten shares an investor owns, or
  • Company product: e.g. a coffee company could send dividends in the form of coupons for a complimentary cup of coffee

An understanding of the relevant dates and times surrounding dividends is also important.  Significant dates include:

  • Declaration date: the date on which the Board of Directors declares, or announces, a dividend.
  • Ex-date (AKA ex-dividend date): The date when a security begins trading without the dividend (cash or stock). Put differently, a purchaser who buys the stock on the ex-date will NOT receive the dividend.
  • Record date: The date when the company reviews its books and records to determine which which stockholders will receive the dividend. Put differently, a shareholder must be an owner of record on the record date to receive the dividend
  • Payable date: The date the dividend is sent to the record owner of the security.

Knopman Notes
Candidates should be familiar with the ways that shareholders can earn returns with equity investments.  One way to do so is to invest in securities that pay regular dividends.  These types of securities are sometimes referred to as dividend-yielding stocks.  Alternatively, investors may invest in mutual funds that focus on dividend-yielding stocks, sometimes called equity income funds.

Relevant Exams
Series 7, Series 24, Series 65, Series 66, Series 79

Written by Dave Meshkov
Dave's mission (and job: Managing Director of Course Design) is to make FINRA exam training engaging, approachable, and dare he even say, enjoyable. Having trained and coached over ten thousand students to exam success he knows how to present complex subjects in memorable and understandable ways. Prior to joining Knopman Marks in 2011, Dave practiced bankruptcy law at Weil, Gotshal & Manages and served as a law clerk in a the Southern District of New York Bankruptcy Court working on the General Motors and Lehman Brothers bankruptcies. Building on his legal expertise and training allows him to keep all our courses updated with the latest legislative and rule-making changes. Dave currently trains for the Securities Industry Essentials (SIE) exam and the Top-Off Series 6, 7, 24, 57, 63, 65, 66, 79, 86, 87, and 99 exams. He also delivers executive one-on-one training and shares his passion for learning outside of work as a ski instructor and yoga teacher. Dave graduated magna cum laude from Fordham Law School, and cum laude with a BA from the University of Pennsylvania.