A dividend is a distribution of a portion of a company's earnings to its shareholders. It is paid out in the form of additional shares of the company's stock, rather than cash. Dividends are typically issued on a quarterly or annual basis, and are usually a small percentage of a shareholder's current holdings.
While dividends are announced in advance, and the payment date is generally known, dividend processing largely relies on the timing in which the DTC processes them. The DTC plays a critical role in the process of distributing dividends to shareholders. When a company declares a dividend, it typically sends the dividend payment to the DTC, which acts as the paying agent for the dividend. The DTC then credits the dividend payment to the accounts of the brokerage firms that are its participants, who in turn credit the accounts of their clients who hold shares in the company.
DriveWealth’s service provides that dividends are paid to customer the day after the payment date, as it cannot be guaranteed that payment will be received in time on payment date for full processing down to the customer Account. When a dividend is processed, it is received in bulk, and correspondingly booked to the customer’s Account through a Transaction.