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Dividend Investing: Managing Risks

Dividend investing is one of the safer investment strategies, but there are still risks, as Mark Lowe pointed out in "Dividend Investing Simplified: The Step-by-Step Guide to Make Money and Create Passive Income in the Stock Market with Dividend Stocks."

This 2019 book also argued, "While it is impossible to completely get rid of the risk, it is still possible to minimize our risk exposure. You can do this by understanding the factors that play behind the sentiment in the stock market."

"Once the company sets the record date, the ex-dividend date is set based on stock exchange rules. The ex-dividend date for stocks is usually set one business day before the record date. If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend."

The SEC also provided this table showing the sequence of events:

Dividend Investing Simplified GuruFocus dividend payment dates

This is how the SEC described the events in the table:

"On September 8, 2017, Company XYZ declares a dividend payable on October 3, 2017 to its shareholders. XYZ also announces that shareholders of record on the company's books on or before September 18, 2017 are entitled to the dividend. The stock would then go ex-dividend one business day before the record date."


Just because you are buying dividend stocks, you don't get a pass on risk management. Like any other stock or security, dividend stocks have risks; some of those risks can be controlled, and some cannot.

For those that can be controlled, risk management involves knowing the company's fundamentals, diversifying so that not all your eggs are in one basket and making decisions with your mind rather than your emotions.

Read more here:

Dividend Investing: Earning Passive Income

Strategic Value Investing: Value Investing in Mutual Funds

Strategic Value Investing: Finding Value Stocks

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This article first appeared on GuruFocus.