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Companies distribute profits to shareholders through cash dividends, which are deposited directly into investors' accounts. However, owning a stock on the day of payment does not guarantee receiving the dividend. To be eligible, you must own the stock on the announcement, ex-dividend, and payment dates. The announcement date is when the dividend amount per share is declared. Shareholders can still buy shares before the ex-dividend date to receive the dividend. Understanding these dates is crucial for investing in dividend stocks.