Dividend Reinvestment Can Bite When Selling Stocks

What happens if you own a dividend stock through the ex-dividend date but sell it before the payout? You still receive the dividend, since you are the shareholder on record as of the official date.

What happens if you have your broker automatically reinvest your dividends? At TradeKing, and most other brokers, you will still receive shares of stock even though you no longer own the shares that gave you the dividend. This is expected because at ex-dividend, that’s what you elected. Unfortunately, there’s no automatic check as to whether you own the original stake (is it technically correct to call it reinvestment if you liquidated the original?) and, as it turns out, there’s no way to change it with 100% certainty.

Source: Bargaineering.com

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