Dividends

The speaker covers the key dates which are associated to dividend payments; the declaration date, record date, and payment date.  The declaration date is when the board votes on the amount of the dividend.  The stock price will increase on this announcment.  The date of record determines which investors will be eligible for the dividend.  The stock becomes ex-dividend at this point and buyers after this date will not receive the dividend.  Finally, the date of payment is when the eligible shareholders will receive their dividend payment.

The speaker provides a visual representation of the dividend discount model as applied to preferred stocks.  The DDM basically, determines the net present value of all future dividend payments to arrive at the true price of a stock.

The speaker discusses that US companies, by in large, pay dividends in the same amount of the previous years.  He suggests that dividends follow earnings and then goes on to suggest that US companies are now buying stock back in leiu of paying dividends.  He goes on to review why companies are increasing stock buybacks.