Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

JAJO

What it is:

JAJO stands for January, April, July, and October -- the four months in which companies are likely to declare dividends.

A dividend declaration is an announcement of an upcoming dividend payment, usually via press release a few weeks before the dividend is paid.

How it works (Example):

Assume you own 100 shares of Company XYZ. At the end of the quarter (say, March 30), Company XYZ calculates its financial performance. The board of directors then reviews this information, including Company XYZ’s profit margin, and declares via an April 30 press release a $0.10 dividend per share for the quarter, payable on May 15 to shareholders of record as of May 1. In this case, the dividend declaration date is April 30. The company will continue to do this once per quarter, the next time being around July 30, October 30 and January 30.

Why it Matters:

JAJO is simply an acronym for the four most important months of the year for income investors. Of course, many things influence the timing and size of dividends. Dividend-paying companies typically declare dividends on a regular basis (usually quarterly), but in general a corporation is not required to pay dividends, nor is it required to pay the same-size dividend, even if it has done so in the past. Even if a company declares a dividend, some of the company’s shareholders may not be eligible: Companies with more than one class of stock often set forth dividend preferences among those classes. Further, corporations do not always have to declare cash dividends -- in some cases they may declare stock dividends. Occasionally, a company will declare an extra dividend after a particularly good year or if it is going out of business -- in which case the dividend is essentially a distribution of the proceeds of asset liquidation.