SPY: Taking Shareholder Money via Dividend Float

When companies declare a dividend, they choose the amount per share, the date the stock will go ex-dividend, and the date payment will be made to shareholders of record. If you hold that stock directly in your account, you know when to expect payment. The process is relatively straightforward. Investors got spoiled by the mutual fund industry. The default option for mutual funds is to have dividends automatically reinvested. Whatever day your mutual fund goes ex-dividend, the total amount of the dividend is used to purchase additional shares at the end of the day. The time lag between ex-dividend and payment received and reinvested is reduced to a minimum.... Read more