Ex-dividend date: How long do I have to hold a stock in order to get the next dividend?
You only have to own it for a day (or rather for some amount of time before the close of trading the day before the ex-dividend date).  This is governed by exchange rules based on the date of record and payable date set by the company.  You might want to look at this article or this one for more details. It should be difficult to make money from changes due to the dividend distribution since it is well known and expected.  The exchanges have established rules for handling the various details that can come up, and traders account for the change where appropriate (as in option pricing).  Also, note that the favorable U.S. tax treatment of dividends requires a 60-day ownership period for the stock.
How do you find good quality dividend stocks? That is an easy one. Past performance has always been my key to this answer. also remember why you are investing in the first place. Do you want cash flow, security or capital growth. Also let's not forget... how much time do you want to devote to this venture. There is going to be a balance in your investing and your returns. More time in... the higher returns you get.  As for finding good dividend stocks, look to the Dividend Aristocrats or the Dividend Contenders. These companies have consistently increased their payouts to their investors for years. There is a trading strategy that could escalate your returns. Dividend Capturing, simply put... You buy the stock before the ex-date and sell after date of record. Thus collecting a dividend and moving on to the next one. Warning: though this is a profitable strategy, it only works with certain stocks so do your research or find a good source. "What you seem to want is a dividend reinvestment plan (DRIP).  That's typically offered by the broker, not by the ETF itself.  Essentially this is a discounted purchase of new shares when you're dividend comes out.  As noted in the answer by JoeTaxpayer, you'll still need to pay tax on the dividend, but that probably won't be a big problem unless you've got a lot of dividends.  You'll pay that out of some other funds when it's due.  All DRIPs (not just for ETFs) have potential to complicate computation of your tax basis for eventual sale, so be aware of that.  It doesn't have to be a show-stopper for you, but it's something to consider before you start.  It's probably less of a problem now than it used to be since brokers now have to report your basis on the 1099-B in the year of sale, reducing your administrative burden (if you trust them to get it right). Here's a list of brokerages that were offering this from a top-of-the-search-list article that I found online: Some brokerages, including TD Ameritrade, Vanguard, Scottrade, Schwab and, to a lesser extent, Etrade, offer ETF DRIPs—no-cost dividend reinvestment programs. This is very helpful for busy clients. Other brokerages, such as Fidelity, leave ETF dividend reinvestment to their clients. Source: http://www.etf.com/sections/blog/23595-your-etf-has-drip-drag.html?nopaging=1 Presumably the list is not constant.  I almost didn't included but I thought the wide availability (at least as of the time of the article's posting) was more interesting than any specific broker on it. You'll want to do some research before you choose a broker to do this.  Compare fees for sure, but also take into account other factors like how soon after the dividend they do the purchase (is it the ex-date, the pay date, or something else?).  A quick search online should net you several decent articles with more information.  I just searched on ""ETF DRIP"" to check it out." Ex-Date is a function of the exchange, as well as the dividend. Consider Deutsche Bank AG, DB on the NYSE, DKR on Xetra. For a given dividend, each exchange sets the ex-date for trades on that exchange.  (See http://www.sec.gov/answers/dividen.htm for a description of how it works in the US; other exchanges/countries are similar.) This ex-date is normally based on the dividends record date, which is when you must be on the company's books as a shareholder to receive the dividend, and based on when trades for an exchange are settled. The ex-date is the first date for which trades on that date will not settle until after the record date. This means that the ex-date can be different for different exchanges. If you sell your shares on an exchange before the ex-date for that exchange, you will not get the dividend. If you sell your shares on or after the ex-date for the exchange, you do not get the dividend. So it depends on the time zone of the exchange. Most stock exchanges trade T+3, but this can still come into play if there are bank holidays in different countries at different times. There are many reasons for buying stock for dividends.  You are right in the sense that in theory a stock's price will go down in value by the amount of the dividend. As the amount of dividend was adding to the value of the company, but now has been paid out to shareholder, so now the company is worth less by the value of the dividend. However, in real life this may or may not happen. Sometimes the price will drop by less than the value of the dividend. Sometimes the price will drop by more than the dividend. And other times the price will go up even though the stock has gone ex-dividend. We can say that if the price has dropped by exactly the amount of the dividend then there has been no change in the stockholders value, if the price has dropped by more than the value of the dividend then there has been a drop to the stockholder's value, and if the price has gone up or dropped by less than the value of the dividend then there has been a increase to the stockholder's value. Benefits of Buying Stocks with Good Dividends: What you shouldn't do however, is buy stocks solely due to the dividend. Be aware that if a company starts reducing its dividends, it could be an early warning sign that the company may be heading into financial troubles. That is why holding a stock that is dropping in price purely for its dividend can be a very dangerous practice. So from Investopedia - Who actually declares a dividend states that the Board of Directors of a company sets the 4 key dates: As these dates are chosen by the Board of Directors, either by internal corporate convention or special situation. Conceivably a Board may choose a Payable Date greater than 2 weeks which may make sense if their accounting partners are unavailable, i.e. extended national holiday. I assume that any period of time longer that what may seem reasonable and customary will be a topic at the next shareholder meeting. It means a 3% return on the value of the stock. If a stock has a $10 share price, the dividend would be $0.30. Normally though, the dividends are announced as a fixed amount per share, because the share price fluctuates. If a percentage were announced, then the final cost would not be known as the share priced could change radically before the dividend date. A one year period of study - Stock A trades at $100, and doesn't increase in value, but has $10 in dividends over the period.  Stock B starts at $100, no dividend, and ends at $105. However you account for this, it would be incorrect to ignore stock A's 10% return over the period.  To flip to a real example, MoneyChimp shows the S&P return from Jan 1980 to Dec 2012 as +3264% yet, the index only rose from 107.94 to 1426.19 or +1221%.  The error expands with greater time and larger dividends involved, a good analysis won't ignore any dividends or splits. "Stock has value to the buyer even if it does not currently pay dividends, since it is part ownership of the company (and the company's assets). The owners (of which you are now a part) hire managers to make a ""dividend policy decision.""  If the company can reinvest the profits into a project that would earn more than the ""minimum acceptable rate of return,"" then they should do so. If the company has no internal investment opportunities at or above this desired rate, then the company has an obligation to declare a dividend.  Paying out a dividend returns this portion of profit to the owners, who can then invest their money elsewhere and earn more. For example: The stock market currently has, say, a 5% rate of return. Company A has a $1M profit and can invest it in a project with an expected 10% rate of return, so they should do so. Company B has a $1M profit, but their best internal project only has an expected 2% rate of return.  It is in the owners' best interest to receive their portion of their company's profit as a dividend and re-invest it in other stocks. (Others have pointed out the tax deferrment portion of dividend policy, so I skipped that)"