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
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