Wednesday, September 13, 2017

About ex-Dividends Revisited

Several years ago, I wrote a post about dividends and ex-dividends. Due to the change to T+2 settlement time, that article needs to be revised. Here, I will discuss the mechanics of dividends. Basically, stocks could be classified into two categories: those that pay dividends, and those that don't. A lot of smaller, growth companies do not pay a dividend. Companies are not required to pay dividends, and each dividend is declared by the company (usually at a board of directors meeting) before it is paid.

In the United States, most companies that pay a regular dividend do so every quarter. There are exceptions, for example some companies pay their dividends only once or twice a year. Most of the time, when looking at a financial website, the dividend is listed with the company stock quote. I estimate that 95% of the time this data is correct. However, sometimes it is inaccurate or outdated, so it is a good idea to confirm this information against another source.

Typically, when dividends are announced, the company will usually issue a press release that says something like this:

DALLAS, Aug. 1, 2017 /PRNewswire/ -- The board of directors of Kimberly-Clark Corporation (KMB) has declared a regular quarterly dividend of $.97 per share. The dividend is payable on October 3, 2017, to stockholders of record on September 8, 2017.

Let's dissect this statement. In 2017, Kimberly-Clark (NYSE: KMB) paid dividends of 97 cents per quarter (equivalent to $3.88 for the year). The dividend is paid on October 3 to "shareholders of record" on September 8. In order to be a "shareholder of record" one has to own the stock 2 business days before the record date. (This is a change from the previous 3 business day requirement.) In this case, that date is September 6. On September 7, the stock goes "ex-dividend". What that means is that if you buy the stock on September 7 or later, you are not entitled to this particular 97-cent dividend. The term "ex-" in this case means "without". So as of September 7, the stock trades without the current dividend.

A common question about dividends is "What happens if you sell the stock on September 7 or later, but before the October 3 date when dividends are paid?" In this case, you would be entitled to the dividend, even though you don't own the stock on the pay date. This has happened to me several times where I've received dividends on stock that I no longer own.

Another more involved question that people sometimes ask is "What if you bought the stock on September 6 and sold the stock on September 7. Does that qualify you as a "shareholder of record" for September 8?"

Looking at a calendar, if you buy the stock on Wednesday, September 6 (trade date), it will settle in your account T+2 days later, on the morning of Friday, September 8 (settlement date). On the settlement date, the brokerage deducts cash from your sweep account in exchange for the stock. If you sell the stock on Thursday, September 7, the sale will settle in your account on the following Monday, September 11.

In this example, you are the "shareholder of record" from the morning of Sept 8 until the morning of Sept 11. This sounds strange because you have already traded away the stock. Nevertheless, you "own" the stock at the close of business of Sept 8, so you are entitled to the dividend. Some investors actually use this method, which is known as a "dividend capture" strategy, to invest in stocks.

PFS

Wednesday, August 16, 2017

Credit Card Bonuses Q4 2017

Save money on purchases and get cash back with coupon codes and the following credit cards:

Citi Dividend Card
  • 5% cash back 7/1/16 - 9/31/17: Hilton & Airlines
  • 5% cash back 10/1/16 - 12/31/17: Best Buy & Department Stores
  • 1% on everything else.
Discover Card
  • 5% cash back 7/1/17 - 9/30/17: Restaurants
  • 5% cash back 10/1/17 - 12/30/17: Amazon.com & Target
  • up to 1% on everything else.
Barclaycard Arrival World MasterCard (Travel Rewards)
  • 2.1% on travel and dining
  • 1.05% on everything else.
  • No annual fee.
BankAmericard Cash Rewards
  • 3% on gas
  • 2% at grocery stores
  • 2% at wholesale clubs (including Costco)
  • 1% on everything else.
  • No annual fee.
Costco Anywhere Visa Card
This card replaced the Costco TrueEarnings Card from American Express on June 20, 2016.
  • 4% on gas
  • 3% on restaurants and travel
  • 2% at Costco
  • 1% on everything else.
  • There is no annual fee, however you must be a Costco member.
Citi ThankYou Card
  • 2X points on Dining Out & Entertainment
  • 1X points on everything else.
Barclaycard Arrival Plus World MasterCard (Travel Rewards)
  • 2.1% on travel and dining
  • 2.1% on everything else.
  • ($89 annual fee after first year)
PFS

Thursday, July 6, 2017

Money Market Rates July 2017

Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

1.20% GS (Goldman Sachs) Bank Online Savings
1.15% Popular Direct Savings*
1.15% Ally Bank Online Savings
1.10% Discover Bank Online Savings
1.10% FNBO Direct Online Savings
1.05% American Express High Yield Savings
0.75% Capital One 360 Savings
0.20% Unify (Western) FCU Money Market
0.03% Citibank Savings Plus
0.03% Chase Plus Savings

In some cases, MMA interest rates are tiered. If this is the case, I usually report the interest rate at the $10,000 tier in these updates. Rates are believed to be accurate as of 7/5/17. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list. I have included one credit union in the list so that readers have a comparison point with banks.

GS Bank (Goldman Sachs) has recently taken the lead among the interest rates. Several other banks have increased their money market rates and most of the ones in my list are now paying more than 1.00%. I expect that some increase will become a trend for a while.

The frequent changes show how variable the money market is. Because this is a constantly moving target, it has been very hard to keep track of the rates that I've been getting in my various money market accounts, and this is the main reason I've decided to compile a list of these annual percentage yields.

So, that is the latest list of money market rates. Please let me know if you know of any higher interest rates.

PFS

Thursday, June 8, 2017

Money Market Rates On The Rise

Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

1.20% GS (Goldman Sachs) Bank Online Savings
1.15% Popular Direct Savings*
1.05% Ally Bank Online Savings
1.01% Discover Bank Online Savings
0.95% FNBO Direct Online Savings
0.95% American Express High Yield Savings
0.75% Capital One 360 Savings
0.20% Unify (Western) FCU Money Market
0.03% Citibank Savings Plus
0.03% Chase Plus Savings

In some cases, MMA interest rates are tiered. If this is the case, I usually report the interest rate at the $10,000 tier in these updates. Rates are believed to be accurate as of 6/7/17. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list. I have included one credit union in the list so that readers have a comparison point with banks.

GS Bank (Goldman Sachs) has recently taken the lead among the interest rates. Several other banks have increased their money market rates by about 5 basis points (0.05%). I expect that this will become a trend for a while.

The frequent changes show how variable the money market is. Because this is a constantly moving target, it has been very hard to keep track of the rates that I've been getting in my various money market accounts, and this is the main reason I've decided to compile a list of these annual percentage yields.

So, that is the latest list of money market rates. Please let me know if you know of any higher interest rates.

PFS

Monday, May 1, 2017

Alexa, Where's My Stuff?

Alexa is an app provided by Amazon that can answer spoken questions. You can also check the status of an Amazon order just by asking, "Where's my stuff?"

Alexa answered me: "A shipment for your order placed on Wednesday, March 29th will arrive on Tuesday, May 23rd."

Hmm, that is a shipping time of nearly 2 months. Am I the only one that is disappointed with Amazon these days?

PFS

Friday, April 14, 2017

How Much Do You Invest?

A question that people often ask is "How much should you invest in a particular stock?" My short answer is a lot.

During a lunchtime conversation with a co-worker, he announced that he was buying 100 shares in company that makes jeans that happen to be popular with his daughter and her friends. In my mind, that is not investing; that is what some people call "playing in the stock market". And I would never do that. True stock investing requires far more fundamental research.

When deciding on how much to invest, you should push yourself to the edge of your comfort zone. The actual dollar amount depends on how big your portfolio is, and how much trading experience you have. What is comfortable for one person might be a stretch for others. But, by pushing toward the end of their comfort zone, investors are forcing themselves to more thoroughly consider their investment.

PFS

Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.

Friday, March 3, 2017

Discover Card Q2 2017 Cashback Bonus Categories

Discover Card offers a 5% cashback bonus on a "seasonally rotating" list of spending categories. They just announced their categories for Q2 2017. Currently, these bonus categories are as follows:

Discover Card
  • 5% cash back 1/1/17 - 3/31/17: Gas Stations, Ground Transportation, and Wholesale Clubs
  • 5% cash back 4/1/17 - 6/30/17: Home Improvement Stores, and Wholesale Clubs
  • up to 1% on everything else.

I find it curious that Discover is offering a 5% bonus on purchases from Wholesale Clubs. The only such club that I'm a member of is Costco, and they do not accept Discover as payment. Does anybody know of a Wholesale Club that accepts Discover?

PFS