Dividends
Chapters in this video
- 0:00 Dividends versus bond interest: no guarantee
- 1:25 Cash, stock, and property dividend types
- 1:57 Qualified versus ordinary dividend tax rates
- 2:49 Stock dividends and the pizza slice illusion
- 4:25 Four key dates and T plus 1 settlement mechanics
- 5:58 Cumulative, non-cumulative, and participating preferred
- 7:11 Rapid-fire exam recap
What this video covers
- Why dividends are not guaranteed and not a contractual obligation, and how this differs from bond interest
- The tax treatment of cash dividends as ordinary income versus qualified dividends at favorable long-term capital gains rates
- The 60-day holding period rule within the 121-day window around the ex-dividend date required for qualified dividend status
- Why stock dividends are not taxable when received, how total shareholder value stays unchanged, and how cost basis per share adjusts downward
- The four key dividend dates (declaration, ex-dividend, record, payment) and how T plus 1 settlement aligns the ex-dividend date with the record date
- Why buying on the ex-dividend date means no dividend, and why you must purchase before the ex-date to receive payment
- How cumulative preferred arrearages accumulate and must be paid in full before any common dividends, versus non-cumulative preferred where missed dividends are lost
Read the full lesson, free
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