What are Record Dates and Payable Dates?
Dividend record and payable dates are important to monitor since they relate to when dividends are paid out to investors from an investment. The record date of an investment dividend refers to the date that the corporation's board of directors sets as the deadline for investors to be counted on the company's books. The payable date is also called the dividend payment date. However, there are other dates that are important to monitor to ensure investors get paid their dividend.
The record date is the date that the company reviews their records to see which shareholders qualified for the next dividend payment. However, investors who buy shares on the record date will be too late to be eligible for the next dividend. The record date is merely a date for the companies that pay dividends to get their records in order.
The ex-dividend date is the date for new shareholders that disqualifies them for earning a dividend in the next period. In other words, investors who buy shares on or after the ex-dividend date will not earn a dividend in the next payment. Investors must buy before the ex-dividend date to qualify for the next dividend. The record date, on the other hand, is typically one-to-two days after the ex-dividend date.
The payable date refers to the date that any declared stock dividends are due to be paid out. Investors who purchased their stock before the ex-dividend date are eligible to receive dividends on the payable date. It's important to note that if the stock is sold on or after the ex-dividend date, the investor will still get paid the next scheduled dividend.
Although it's important to be aware of all the deadlines pertaining to a dividend dispersal, knowing the ex-dividend date is crucial to understanding whether or not investors are entitled to receive a dividend payout on the payable date.
Example of Record and Payable Dates
Below is the dividend information for 3M Company (MMM), which is a large company involved in the industrial, healthcare, and consumer segments. 3M is a perennial dividend payer with over a 50-year track record of paying dividends. Below is a table from their investor relations page outlining the important dividend dates for 2019.
- We can see that the ex-dividend date is on August 15–one day before the record date of August 16.
- The payable date falls on September 12, 2019.
- In other words, for all investors that bought or owned shares before the ex-dividend date of August 15, will get paid a dividend on September 12.