If a company moves its dividend record date forward, does the ex-dividend date change too?

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. How do I calculate the dividend payout ratio from an income statement?

    Understand the dividend payout ratio, how it differs from the dividend yield and how it can be calculated from a company's ...
  2. What are the pros and cons of owning preferred stock instead of common stock?

    Understand and explore the advantages and disadvantages of owning preferred stock as opposed to owning common stock shares ...
  3. What is the difference between dividend yield and dividend payout ratio?

    Understand the difference between the dividend yield and the dividend payout ratio, two basic investment valuation measures ...
  4. What is the difference between yield and dividend?

    Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ...
RELATED TERMS
  1. Policyholder Dividend Ratio

    The policyholder dividend ratio is a measurement of the profitability ...
  2. Paid-Up Additional Insurance

    Additional whole life insurance that a policyholder purchases ...
  3. Accelerated Dividend

    Special dividends paid by a company ahead of an imminent change ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. Payout Ratio

    The proportion of earnings paid out as dividends to shareholders, ...
  6. Retention Ratio

    The proportion of earnings kept back in the business as retained ...

You May Also Like

Related Articles
  1. Trading Strategies

    Risk Management Techniques For Shorting ...

  2. Mutual Funds & ETFs

    Why Monthly Dividend ETFs are Good for ...

  3. Trading Strategies

    General Electric: Good News/Bad News

  4. Trading Strategies

    American Express: Headwinds and Tailwinds

  5. Trading Strategies

    Is 'Big Blue' Now Black And Blue?

Trading Center