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I was looking at ETFs and noticed that etf like QQQ, DIA( Ex date is 09/20/2019 but pay date is 10/15/2019) pay dividends about 5 to 6 weeks after the Ex-Dividend date . But other etfs (e.g IVV, VOO) pay dividend in less than 1 week after the ex -dividend date. Please see screenshots below.

My Question is why is that? Why some ETF companies are holding the money for 5-6 weeks, but others are able to pay with in a week?

DIA Dividend Dates

QQQ Dividend Dates

IVV Dividend dates

Note: This question is simply asking what is the logic( reason) behind such delay ( by some etf)or not delay (by some etf) in paying the dividend. No one is asking suggestion if one should chose what kind of ETF, rate of return. No one is asking that ETF value goes by the dividend amount etc. And even in same ETF category like S&P 500 some ETFs are paying in 1 weeks( VOO and IVV) and some are paying in 5-6 weeks (SPY).

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    @ben-miller yes there could be bigger concerns with ETF company going bankrupt. My main question is why are these companies holding dividend for 5-6 weeks. – Raj Sep 22 at 22:29
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    @bob-baerker I am not asking what kind of ETF pays dividend or not. I am also not asking about leveraged ETFs either – Raj Sep 23 at 1:44
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    I don't know that the "why" can be answered without inside information into their strategy. But I would remind you that dividends are a wash from a value standpoint - the value of the ETF goes down by the amount of the dividend. So at worst you're missing out on a few weeks' worth of returns on the dividend amount. – D Stanley Sep 23 at 13:44
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    @d-stanley from a value standpoint why question is being looked at another angle ? It is a very simple question that, why ETF companies are holding money. A dollar today is worth more than a $ 6 weeks later. – Raj Sep 23 at 14:32
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    @bob-baerker I don't understand what is wrong in asking this question and why it is being related to 17% market return ( very difficult to beat the market). The question is not about it does not matter etc, question is why some etf company hold the dividend long and why some does not hold long. – Raj Sep 23 at 18:03
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The simplistic answer is that Ex Dates and Payment/Payable Dates serve different purposes, so there is no intrinsic reason why they should be the same.

Ex Dates are administrative - they serve to indicate whether someone is entitled to the upcoming dividends.

Once the company sets the record date, the ex-dividend date is set based on stock exchange rules. The ex-dividend date for stocks is usually set one business day before the record date. If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend. - Ex-Dividend Dates, Investor.gov

Payment/Payable Dates are transactional: companies need to actually make payments to shareholders.

Payment date is the day when the dividends will actually be distributed to the shareholders of a company or credited to brokerage accounts. - Introduction to Dividends, Boundless Finance

The rest of this answer is an educated guess. (This answer is not to be taken as financial advice.)

Directors determine the amount paid out at each dividend. They may consider various factors, but once they have made the decision, they are sitting on insider information. So it makes sense for them to release that information (the Record Date and the amount of the dividend) as quickly as possible.

Since money is paid out, the company might want to check and recheck to ensure they got it right before authorising payment. Hence it makes sense for some time to pass between the Ex-Date (or more to the point, the Record Date) and the Payment/Payable Date.

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    thanks for the answer, though it does not answer what I am asking. I know very well that *** Ex Dates and Payment/Payable Dates serve different purposes***, what I asked why there is so much gap between the two dates for some ETFs in same category( IVV v/s SPY) for another example. – Raj Sep 25 at 16:50
  • @Raj If you're asking why the gap has such a big range, it could be all sorts of things - e.g. cashflow, scheduling issues, banking issues, earning a bit more interest before paying out the dividend, etc. The thing my answer points to is that there is no pressure for the gaps to be uniform, so non-uniformity is kind of the 'expected' state, needing no further explanation. – Lawrence Sep 25 at 17:03
  • ETF based on S&P 500 like SPY , IVV and VOO has same set of underlying stocks, so will have same cashflow, scheduling issues, banking issues , then why wide v/s narrow pay date. – Raj Sep 26 at 13:38
  • @Raj Same answer: different ETFs, no reason for synchronised timing. By way of analogy, say Tom gets an iPhone and Jerry gets an iPhone. Same ‘content’, but if Tom wants to pay upfront in full, that’s no reason why Jerry can’t pay on an instalment plan. Just because 2 ETFs buy the same underlying stocks doesn’t constrain them to have the same payment dates. – Lawrence Sep 26 at 15:43
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Summarizing some lengthy comments in a vague answer:

  • I have not found any published explanation of their ex-dividend period choice, so it would probably take an insider to explain that strategy
  • The impact of a "longer" ex-dividend period to you is minimal - just the time value of the dividend itself. The dividend is a wash from a value standpoint (the value of the fund goes down by the amount of the dividend).
  • The underlying stocks pay dividends at various times, so you should not assume that the fund receives all dividends at once and is sitting on cash for 5-6 weeks just waiting to pay it out. One possibility is that they declare an ex-dividend date that gives them enough time to 1) qualify for all of the underlying dividends, 2) receive the dividends, 3) prepare a dividend payment to holders. But that is just speculation.
  • thanks for trying, but it does not answer what is asked. First 2 points are not answering the question. The 3rd point where you say about enough time I will say it is computer era and if you look at SPY ( slow in paying) v/s IVV( and VOO) are quick in paying, all these are S&P 500 etf – Raj Sep 25 at 16:53
  • Well just because we have computers doesn't mean that everything is easy/cheap to automate. What if the underlying companies pay out dividends over a 6 week period? Should the fund pay out dividends before all of the companies do? What difference would it make if the ex-div date (not the payout date) was 4 weeks later? But again I believe only an insider would know the actual reasoning. – D Stanley Sep 25 at 18:20
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    ETF based on S&P 500 like SPY , IVV and VOO has same set of underlying stocks, so your statement Should the fund pay out dividends before all of the companies do does not apply – Raj Sep 26 at 13:36

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