Penny Stocks: The Penny Stock Blog

Dividends and Penny Stock Dividends

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.

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.

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.

Dividends and Penny Stock Dividends

Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business, or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend.