Final answer:
In order to receive a dividend, a stockholder must purchase stock before a certain date. That date is called the ex-dividend date.
Step-by-step explanation:
A stockholder must purchase stock prior to a specific date in order to be eligible for a dividend. That date is called the ex-dividend date. When a firm issues stock, it offers a rate of return to the investors, which may come in the form of dividends or capital gains.
A dividend is a direct payment by the firm to its shareholders, representing a portion of the company's profits. For example, if a stock pays a dividend of 75 cents per share, a person owning 85 shares would receive a total dividend payment based on the number of shares they own. The other form of return is a capital gain, which is the increase in a stock's value from the time it is purchased to when it is sold.
Owning stock in companies that traditionally pay dividends, such as Coca-Cola or electric companies, can provide a steady income stream to shareholders.