Every dividend stock market investor is focused on finding the best long term dividend stocks.  Things like stock dividend yield and ex dividend date calendar become common knowledge to savvy income seekers.

With this said, there are three primary terms that all successful dividend investors understand.  Here are the three terms:

 1. The Ex- Dividend Date

This is the most important date for dividend investors.  The ex dividend date is the first day after a dividend is declared that the investor will not be entitled to collect the dividend.

This means that investors who wish to collect the dividend MUST purchase the stock prior to the ex-dividend date.

2. Dividend Frequency

Dividend frequency is the number of annual times the company pays dividends.  It is often overlooked when it comes to choosing the best long term dividend stocks

Most stocks pay dividends quarterly.  Some stocks pay dividends annually or semi-annually.  Other companies, particularly those designed to pay investors via dividends, pay monthly dividends.

You may be asking what it matters. Well, with all things being equal, the more frequent the dividend, the better.  You see with dividend reinvestment, the more frequently you are paid, the faster your money compounds on itself.

3. Yield Is A Function Of The Stock Price

While this may seem obvious to you, many investors don’t full understand the implications.

The yield/share price correlation is a critical and often overlooked fact about dividend investing.  Let me explain with an example.

If a stock sells for $100 and pays a $5 per share dividend, the yield is 5%.  If the same stock fell in price to $50.00, the yield would be 10%.  Therefore, it’s crucial to make sure that the high yielding stock you are considering isn’t high yielding because of a plunging stock price.

Another thing to keep in mind is something called effective yield.  Effective yield is personal and based on the price you paid for the shares.