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March 11, 2003 - ICLUBcentral News

NAIC Software News March 11, 2003


How Are Dividends Reinvested?
by Michael Deemer, MyStockFund Securities

Have you ever bought a stock only to find out later that you were not entitled to the next cash or stock dividend paid by the company? To determine whether you should get cash and most stock dividends, you need to look at two important dates. They are the "record date" or "date of record" and the "ex-dividend date" or "ex-date."

Once the company sets the record date, the stock exchanges or the National Association of Securities Dealers, Inc. fix the ex-dividend date. The ex-dividend date is normally set for stocks two business days before the record date. If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend.

Here is an example:

Home Depot Declaration Date - 11/6/01
Home Depot Ex-Dividend Date - 11/28/01
Home Depot Record Date - 11/30/01
Home Depot Payable Date - 12/13/01

On July 27, 1999, Home Depot declares a dividend payable on December 13, 2001 to its shareholders. Home Depot also announces that shareholders of record on the company's books on or before December 30, 2001 are entitled to the dividend. The stock would then go ex-dividend two business days before the record date.

In this example, the record date falls on a Friday. Excluding weekends and holidays, the ex-dividend is set two business days before the record date at the opening of the market in this case on the preceding Wednesday. This means anyone who bought the stock on Wednesday or after would not get the dividend. At the same time, those who purchase before the ex-dividend date receive the dividend.

With a significant dividend, the price of a stock may move up by the dollar amount of the dividend as the ex-dividend date approaches and then fall by that amount after the ex-dividend date. A stock that has gone ex-dividend is marked with an "x" in newspapers on that day.

BNCYS reinvests the dividend on the pay date at the open of the market at 9:30am Eastern.


The dividend declared was $2.98 divided by 47.75 = .0624083 BNYCS rounds .0624083 number to thousands place. In this case we will purchase .062 shares of Home Depot.

Sometimes a company pays a dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company or in a subsidiary being spun off. The procedures for stock dividends may be different from cash dividends. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date).

If you sell your stock before the ex-dividend date, you are also selling away your right to the stock dividend. This is the case even if the sale took place after the record date. When this happens, your sale includes an obligation on your part to deliver to the buyer of your shares any additional shares because of the dividend. It is important to remember that the day you can sell your shares without being obligated to deliver the additional shares is not the first business day after the record date, but usually is the first business day after the stock dividend is paid.

Michael Deemer manages brokerage operations for MyStockFund Securities, Inc. ICLUBcentral customers can now receive a discount off the annual fee when signing up for a MyStockFund brokerage account. MyStockFund offers its members the ability to purchase fractional shares from hundreds of companies, exchange traded funds and bond funds; a low annual fee for unlimited monthly purchases; low minimums; free dividend reinvestment; an automatic stock purchase program; and a range of educational and financial services designed to better assist the long-term investor.

Calling Condo Association Treasurers!

ICLUBcentral and the Community Associations Institute will soon be launching a software package to help self-managed condominiums, homeowners associations, and cooperatives manage their bookkeeping, budgeting, and taxes. We are seeking motivated community association treasurers to participate in our beta test of the software. In return, beta testers will receive a free copy of the software and free upgrades. If you would like to apply to the beta program or if you're just interested in learning more about the software, please write to

10 Tips for Bear Market Depression
by Joe Pulizzi, ICLUBcentral Inc.

Well, we have been in a bear market for well over two years now. Whether you know it or not, I'm sure there are members of your club, maybe including yourself, who are discouraged by the current bear market. It is times like these that investment clubs lose membership, which may include losing valuable club members.

There are a variety of things that clubs can do to retain interest in investing. Most of these you have heard before, but maybe you have not had the opportunity to commit to a particular event.

Bear Market Activities/Reminders

  1. Be sure that one person is not doing all the work (stock studies, industry reports, etc.). Many times in a bear market, one person will work extra hard to keep the club going. This just ends up hurting the club in the long run.
  2. Study stocks that are well known by club members. We have recently studied stocks such as Yankee Candle, Krispy Kreme, and Pfizer.
  3. Study stocks that stay constant during a recession, such as Consumer Non-Cyclical stocks (things that consumers have to buy whether the economy is good or bad, such as Gillette).
  4. Bring on the Guest Speakers! Guest speakers can really add that spark to your club. It may be a good idea to bring in guests from another club. They can attest to the fact that all clubs are having difficult times in this bear market - not just your club.
  5. Review interesting industries, such as biometrics, fuel cells, motion pictures, toys - whatever floats your boat.
  6. Have educational segments about why stocks are not performing well. Discuss why corporate earnings are off and how many companies are laying off mass amounts of people. This may put your club losses in perspective.
  7. Review the warning signs from this bear market and how to learn for next time. A great example for my club was Cisco's rising inventories. We didn't pay attention to them - and by the time we did the stock was already below 30, down from 60. Oh well, live and learn.
  8. Take a field trip. Try to plan a group trip to one of your company's annual meetings. I know this will be difficult, but it could be very exciting - and educational.
  9. Visit a company you own - Wal-Mart, Krispy Kreme (Yum!), Ford, Gap, Nike, Home Depot, etc. Analyze what they are doing right, wrong, etc.
  10. Go through a list of companies that you are thankful you never owned - Etoys, Enron, Worldcom, Global Crossing (If you owned one of these companies, I apologize. I hope you sold in time.).

The most important thing to remember is that you and your club are in this for the long haul. Bear markets are a natural part of the stock market experience.

Find great stocks with NAIC Stock Prospector

NAIC's official stock screening software, NAIC Stock Prospector mines the Online Premium Services (OPS) datafiles to find great stocks for potential investment.

Available for just $59. Order at 1-877-275-6242, ext 0, or buy it online. More information and demo copies available at the ICLUBcentral website.

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