What are Dividends?
A dividend is a portion of the profits that a company decides to distribute among its shareholders (the owners of its shares).
How often are they paid?
The most common is that companies pay dividends quarterly (four times a year), although some may do so monthly, semi-annually, or annually.
Key Dividend Dates (Your Payment Schedule)
Understanding these dates is crucial to know when you should buy or sell a stock to qualify for payment:
Declaration Date: The day the company officially announces the amount per share and the payment schedule.
Ex-Dividend Date: The deadline to buy a stock and be entitled to receive the next dividend. If you buy the stock on or after this date, you will not receive the dividend.
Record Date: The day the company verifies who the official owners of the eligible shares are. You must have bought before the ex-dividend date to be registered.
Payment Date: The day the dividend money is deposited directly into your Vest investment account. (This may have a 24-hour variation afterwards).
How to Use Your Dividends in Vest?
In Vest, your dividends are always deposited as cash available in your investment account.
As Passive Income: Dividends are available in your balance for you to use as extra income or to withdraw.
As Reinvestment: If you wish to reinvest your dividends, you must use the money received to buy more shares or ETFs that generated that income.
Do dividends generate taxes?
Dividends you receive from US company stocks and ETFs are subject to mandatory tax withholding by the US Internal Revenue Service (IRS).
Applied Withholding: Vest (through its custodian, DriveWealth) is obliged to withhold a percentage of the dividend before it is deposited into your account.
Standard Rate: The standard withholding rate for non-US investors is 30% of the total dividend amount.