Dividends, Splits and Corporate Actions

How do I tell if a stock pays a dividend?

Finding out if a stock pays a dividend is as simple as finding a detailed quote. Here’s how:

  1. At the top of the page, enter the name or symbol in the Search or Get Quote box, and click on the stock you’re looking for
  2. In the Key Statistics & Ratios section on the right, you will find information on the stock's Annual Dividend Yield and stated above this is the dividend’s frequency and most recently announced dividend amount

Not every stock pays a dividend. In fact, those that do pay a dividend will pay them on their own schedule. Most stocks that do pay a dividend will do it quarterly (four times per year), but some pay annually, semi-annually or even monthly. We’ll reinvest your dividends for free, unless you tell us otherwise by changing your reinvestment preferences.

Tip: The dividend (and the cash amount) a stock pays is subject to change. A stock might pay a dividend now, but there’s no guarantee it will in the future. You can find past dividends and their payable dates on the Earnings & Events tab.

Where do I find how much a dividend pays?

You can find how much the next dividend payment is going to be after looking up a detailed quote by going to the security’s symbol or with the Search or Get Quote bar:

  • Stocks – Go to the Earnings and Events tab then change the Corporate Actions and Events table to Dividends in the top corner. Here you can see the different dividend dates and the payment amount.
  • Exchange-Traded Funds (ETFs) – Go to the Distributions tab and you’ll see the dividend amount and payable date next to Dividend Income under the chart.
  • Mutual Funds – Go to the Distributions tab and you’ll see the dividend amount and payable date next to Dividend Income under the chart.

Tip: If the only dividend dates you see are in the past, then the security hasn’t announced when its next dividend will be. If it pays on a recurring basis, there’s a good chance that it will stick with its payment schedule. You can see how frequently this is on the Snapshot tab in the Key Statistics & Ratios section for stocks or the Distributions and Yield section for ETFs and mutual funds.

Dividend Dates

When a stock, exchange-traded fund (ETF) or mutual fund pays a dividend, there are a few important dates that you should know about:

  • Announcement Date – When the Board of Directors tells the public about an upcoming dividend
  • Ex-Dividend Date – Meaning “after dividend,” you must buy the security before this date or sell on or after this date to receive the dividend
  • Payable Date – When the dividend is paid by the company and arrives in your account

We reinvest dividends from stocks and ETFs on the payable date at the previous business day’s closing price. We reinvest dividends from mutual funds on the payable date, at the closing price of the ex-dividend date.

Are Special Dividends handled the same way as other dividends?

Sometimes a stock will announce a special cash dividend that can have a different payment than its regular dividend. These special dividends are handled differently than a regular dividend in the following ways:

  • Not Reinvested – The dividend is paid in cash regardless of your reinvestment preferences. Since these special cash dividends tend to be larger than regular dividends, reinvestments can move the market (quickly drive up the price) and be reinvested at a higher than expected price.
  • Non-Standard Ex-Dividend Date – While the company usually announces an ex-dividend date, it is not always approved by the SEC and the ex-dividend date could be pushed back to a later date.

What happens to my shares with a Forward Stock Split?

A stock split changes the number of shares and the price per share, but does not change your position’s total value. With a forward split, the number of shares is increased while the price per share is decreased.

Example: XYZ initiates a 2-for-1 stock split (sometimes written as 2:1). You have 50 shares of XYZ valued at $4 per share prior to the stock split totaling $200 in value. After the forward stock split, you own 100 shares of XYZ valued at $2 per share. Your total position is still worth $200.

Tip: Sometimes when a stock splits, it changes its symbol or CUSIP ID. This means the old symbol is no longer traded and your shares will be replaced with new shares as soon as we receive them from the Transfer Agent. You don’t have to do anything except wait for us to update your shares.

What happens to my shares with a Reverse Stock Split?

A stock split changes the number of shares and the price per share, but does not change your position’s total value. With a reverse split, the number of shares is decreased while the price per share is increased.

Example: XYZ initiates a 1-for-5 stock split (sometimes written as 1:5). You have 100 shares of XYZ valued at $2 per share prior to the stock split totaling $200 in value. After the reverse stock split, you own 20 shares of XYZ valued at $10 per share. Your total position is still worth $200.

Tip: When a stock has a reverse split, it always changes its CUSIP ID and may change its symbol too. This means the stock with the old CUSIP and symbol is no longer traded and your shares will be replaced with the new shares as soon as we receive them from the Transfer Agent. You don’t have to do anything except wait for us to update your shares.

What happens if my stock is purchased by another company?

One company purchasing another is called an acquisition. When a company you own is purchased, the shares you own go away, and you get paid by the purchasing company in one of the following ways:

  • Cash Acquisition – Just like when you sell stock, the purchasing company pays you a set dollar amount for each share you own
  • Stock Acquisition – The purchasing company gives you shares of its own stock in place of your shares
  • Cash and Stock Acquisition – You receive both cash and shares of the purchasing company

Acquisitions are mandatory reorganizations and the amount of cash and/or shares you receive is determined and announced by the purchasing company. You can find the specifics of the acquisition on the investor relations page of either company’s website. We post the payment to your ShareBuilder account (either cash or stock) when we receive it from the Transfer Agent.

How are my shares affected by a stock merger?

When two companies become one, the ownership of those companies is reorganized into a single combined company trading as either one surviving stock or as a brand new stock. Your ownership in the company prior to the merger is affected in one of the following ways:

  • Cash Merger – You receive cash for each share you own, just as if you sold your shares, and the old stock will no longer be traded.
  • Stock Merger – For each share of the old stock you own, you receive a set number of shares of the surviving or new company’s stock.
  • Hybrid Merger – You have control of your payment preference and can elect (choose) to receive either cash or stock from the merger. If you have a preference, go to www.reorgaction.com and enter your control number (you probably got this in an email). Once there, you’ll find more info, including the terms of the elections (the details of your choices).

Mergers are mandatory reorganizations and the type of merger is determined by the companies involved. However, making an election in a hybrid merger is a voluntary action and has a $25 charge. When you make an election, be sure to have $25 available in your cash balance to cover ShareBuilder’s voluntary reorganization charge. We post the payment to your ShareBuilder account (be it cash or stock) when we receive it from the Transfer Agent.

Tip: If you don’t submit an election for a hybrid merger, you won’t be charged $25 for the voluntary reorganization. The default election is chosen for you, but it may take longer to receive your payment from the merger.

How do I get new stock from a spinoff?

Sometimes, an existing company (called the parent company) will split its resources and operations and become multiple companies. This spinoff creates new stock for the newly created company and can sometimes affect the parent company’s stock.

Spinoffs are mandatory reorganizations and you receive shares of the new company based on the number of shares of the parent company you own. The ratio of new shares you will receive is determined by the parent company and is usually announced in a company press release. This is also how the cost basis of the new shares is determined.

Tip: The stock of the parent company usually decreases in value after a spinoff as it loses part of its assets, but your portfolio may not change in total value as drastically because you’ll receive the new company’s shares. These new shares will appear in your ShareBuilder portfolio as soon as we receive them from the Transfer Agent.

What is a Symbol, Name or CUSIP Change?

First, let's define CUSIP. The acronym stands for Committee on Uniform Securities Identifying Procedures (but that really doesn't tell you what it is). A CUSIP is like a stock's serial number. Every stock has one and it's used (along with the 1 to 5 letter ticker symbol and the company's name) to distinguish one stock from another.

There are several things that may cause your stock’s symbol, the company’s name, or the CUSIP ID to change, and it’s usually a result of another corporate action or company reorganization.

When the change becomes effective, the stock with the old symbol, name or CUSIP ID is no longer traded. New shares will appear in your ShareBuilder portfolio as soon as we receive them from the Transfer Agent. You don’t have to do anything but wait for the update.

American Depositary Receipt (ADR)

An American Depositary Receipt (ADR) allows stocks from other countries to be traded on a US stock exchange. You can tell if a symbol is an ADR if it has a blue ADR label next to the ticker symbol on a detailed quote. You can buy and sell them like any other stock, but there are a few costs to consider:

  • Pass-through ADR Service Fee – Periodically charged by the bank that enables this foreign stock to be traded on the US market. This charge will come out of your cash balance.
  • Foreign Tax – Dividends are subject to the foreign tax rate of the stock’s home country.

Talk to a qualified tax professional when reporting foreign tax in Individual, Joint or Custodial account.

What does a Transfer Agent do for my securities?

What does a transfer agent do?
A transfer agent is in charge of tracking who owns a company’s shares. They will send you new shares when a corporate action changes the shares you currently own.

How long does it take a transfer agent to send me shares from a corporate action?
Time frames vary between different transfer agents and there are many different factors contributing to the transfer time including the type of security, the corporate action and exchange involved. There is no way for us to estimate an expected time of arrival of new shares.

How do I find what transfer agent is used by a security?
You can find the transfer agent a security uses from the Investor Relations page on a company’s website. Most will also have a way to contact the transfer agent directly.

Can I transfer my securities to a transfer agent?
Transfer agents can hold the securities they track using the Direct Registration System (DRS). We can transfer DRS eligible securities for you from your ShareBuilder account to the transfer agent.

What’s the difference between Mandatory, Voluntary and Hybrid Reorganizations?

Reorganization is when a company changes something that affects the way its stock is traded. Different corporate actions cause a company’s reorganization and your participation in the reorganization is determined in one of the following ways:

  • Mandatory – Your shares must participate in this reorganization, but there is no cost to do so and your shares will automatically change once we receive the reorganized shares from the Transfer Agent.
  • Voluntary – You get to choose if you want to have your shares reorganized by participating in the Corporate Action. We charge $25 to process your participation in any voluntary reorganization.
  • Hybrid – Offering the reorganization itself is mandatory, but you may have a choice to make. If you don’t do anything, you could be subject to the default election (whatever the company decides for you) and you won’t get charged. If you state a preference, you are participating in the voluntary reorganization and will have to pay the $25 voluntary reorganization charge. Any choices that you can make along with default elections can be seen from the company’s investor relations page on their website.