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Many companies share profits with their stockholders by paying cash dividends, which are automatically deposited into the shareholders investment accounts. These automatic payments may seem like a straightforward way to profit from stocks and ETFs, but simply owning a stock on the day a dividend is paid doesnt guarantee youll receive it. The day the dividend is announced, the day you need to be a shareholder to be eligible to receive that dividend, and the day the dividend is paid are all different. Understanding these dates can help you know what to expect when investing in dividend stocks. Heres how it works. First, the company declares the dividend on the declaration date. This is when the board of directors announces how much each shareholder will receive per share. But shareholders dont get their dividend immediately. In fact, if you want the dividend but dont own shares yet, you still have time to buy. When the board of directors declares the dividend, it also announces wh