A:

When a dividend is declared, there are three important dates for investors: the dividend payable date, the dividend date of record and the ex-dividend date.

The dividend payable date is the date that the company will actually make the dividend payments that it has announced. The dividend record date is the date that determines which shareholders will receive the dividend - any shareholders on record on that date will be paid. However, as this date approaches, an ex-dividend date is used to ensure that no confusion exists about which shareholders are on record. The ex-dividend date is the second business day before the date of record. Anyone who purchases the stock on or after the ex-dividend date does not receive the dividend, and the dividend is subsequently paid to the shares' previous owner.

In general, this process is fairly simple for investors to track. However, sometimes after announcing a dividend and a dividend record date a company may decide to change the date. For example, assume company XYZ announces that it will pay a dividend on February 3 to shareholders on record as of Friday, January 15. With this dividend record date, the ex-dividend date will be Wednesday, January 13. However, a week later, the company announces that it will push the record date forward to Thursday, January 25. Because the date of record has changed, the ex-dividend also changes, becoming Tuesday, January 23, the second business day before the new date of record.

To learn more, see Declaration, Ex-dividend And Record Date Defined, The Importance Of Dividends and The Power Of Dividend Growth.

RELATED FAQS
  1. Why should I pay attention to a dividend's ex-dividend date?

    Understand the importance of the ex-dividend date as the critical date for determining which stockholders qualify to receive ... Read Answer >>
  2. How can I find out what date(s) I am supposed to be entitled to ex-dividends?

    Understand the various dates associated with payment of stock dividends and specifically how the determining ex-dividend ... Read Answer >>
Related Articles
  1. Investing

    What is a Record Date?

    The date established by an issuer of a security for the purpose of determining the holders who are entitled to receive a dividend or distribution.
  2. Investing

    How Dividends Affect Stock Prices

    Find out how dividends affect the price of the underlying stock, the role of market psychology and how to predict price changes after dividend declaration.
  3. Investing

    Dividend Facts You May Not Know

    Discover the issues that complicate these payouts for investors.
  4. Investing

    How Dividend-Paying ETFs Work

    Understand how ETFs that hold dividend-paying securities collect and pass along those dividends proportionally to the shareholders of the ETF.
  5. Investing

    Make Ex-Dividends Work For You

    Find out how to keep your dividends out of the tax man's hands.
  6. Investing

    Due Diligence On Dividends

    Understanding dividends and how they work will help you become a more informed and successful investor.
  7. Investing

    How To Use The Dividend Capture Strategy

    Dividend capture strategies provide an alternative investment approach to income seeking investors.
  8. Investing

    The Truth About Dividends

    Dividends may seem like money for nothing, but they have several implications.
RELATED TERMS
  1. Ex-Dividend

    A classification of trading shares when a declared dividend belongs ...
  2. Payment Date

    The date on which a declared stock dividend is scheduled to be ...
  3. Record Date

    The cut-off date established by a company in order to determine ...
  4. Unpaid Dividend

    A dividend that is owed to stockholders of record but has yet ...
  5. Declaration Date

    1. The date on which the next dividend payment is announced by ...
  6. Dividend Rollover Plan

    An investment strategy in which a dividend-paying stock is purchased ...
Hot Definitions
  1. Notional Value

    The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets ...
  2. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  5. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  6. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
Trading Center