Understanding Dividends, Special Dividends, and Their Processing Time

Dividends are payments that publicly traded companies make to their shareholders, usually in cash. If you hold shares when trading closes on the day before the ex-dividend date, you are eligible to receive the payment. Longbridge will process your cash dividend payment within 1 to 3 working days after the payment date.

On the ex-dividend date, the stock price usually drops, so you may see a temporary loss in your portfolio. However, this loss will be balanced out by the cash dividend credited to your account. The cost of your shares stays the same.

In essence, receiving dividends means your portfolio shifts from being 100% in stock to a combination of stock (at a lower price) and cash dividends (equal in value to the price drop).

Special dividends are a type of dividend distributed for unique reasons, such as when a publicly traded company makes extra profits from an investment outside its core business.