Lesson 2 of 7 · 12 min
Dividends, splits, buybacks and the payment timeline
Only cash distributions change what shareholders receive: stock dividends and splits just cut the same pie into more slices, a buyback is equivalent to a cash dividend, and a share stops carrying the dividend on its ex-date.
In short
- Regular cash dividends are paid at known intervals; extra (special) dividends are one-offs or top-ups.
- Stock dividends, stock splits and reverse stock splits change the share count and price per share but not the value of the company or anyone's ownership share.
- A share repurchase is an alternative to a cash dividend and, all else equal, has the same effect on shareholder wealth.
- Chronology: declaration date → ex-dividend date → holder-of-record date → payment date.
- On the ex-dividend date the share price falls by roughly the dividend, because new buyers no longer get it.
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