1. Introduction To Dividends: Introduction
  2. Introduction To Dividends: Terms To Know And Other Basics
  3. Introduction To Dividends: Dividend Dates
  4. Introduction To Dividends: Investing In Dividend Stocks
  5. Introduction To Dividends: Doing Your Homework And Taxes
  6. Introduction To Dividends: Conclusion

A company’s Board of Directors must declare all dividends. Four dividend-related dates are important to this process:

Declaration Date

The declaration date is the date the dividend is announced by the Board of Directors. The declaration statement includes the size of the dividend, the date of record and the payment date (see below). Once a dividend is declared, the company has a legal responsibility to pay it.

Record Date (or Date of Record)

When a company announces a dividend, it sets a record date – the date you must be on the company’s books to receive the declared dividend. On the record date, the company determines its shareholders, or “holders of record,” and establishes who is sent financial reports, proxy statements and other information.

Ex-Dividend Date (or Ex-Date)

After the company sets the record date, the ex-dividend date is set in accordance with stock exchange rules. If you buy the stock before the ex-dividend date, you’ll receive the dividend – but if you buy on or after the ex-date, you won’t (in this case, the seller of the stock is entitled to the dividend). As an example, assume that stock ABC recently announced a cash dividend with an ex-dividend date of December 7. If you buy 100 shares of ABC on that date (or after), you won’t receive the dividend, but if you buy the shares on December 5 – before the ex-dividend date – you’ll be entitled to the next dividend. (For more, read Why Don’t Investors Buy Stock Just Before the Dividend Date and Sell Right Afterwards?)

The ex-dividend date is usually set one business day before the record date. A stock’s price may increase by the dollar amount of the dividend as the ex-date approaches. On the ex-dividend date, the exchange may reduce the price per share by the dollar amount of the dividend. [L3]

Payment Date (Payable Date)

The payment date is the scheduled date the company pays the declared dividend. Only shareholders who own the stock before the ex-dividend date are entitled to the dividend.

Here’s an example that shows the timeline for a dividend Coca-Cola paid in Oct. 2017:



Declaration Date

Ex-Dividend Date

Record Date

Payment Date


July 21, 2017

Sept. 14, 2017

Sept. 15, 2017

Oct. 2, 2017


KO announces a dividend.

The date before which you must own KO to be entitled to the dividend.

The date by which you must be on KO’s books as a shareholder to receive the dividend.

The date KO pays the dividend to shareholders.


Figure 2: Important dividend dates.

Introduction To Dividends: Investing In Dividend Stocks
Related Articles
  1. Investing

    Declarations, Ex-Dividends and Record Dates

    Understanding the dates of the dividend payout process can be tricky. We clear up the confusion.
  2. Trading

    Understanding How Dividends Affect Option Prices

    Learn how the distribution of dividends on stocks impacts the price of call and put options, and understand how the ex-dividend date affects options.
  3. Investing

    Understanding Taxes on Mutual Funds Dividends

    Learn about the basics of mutual fund dividend taxation, including how and why mutual funds pay dividends and when different tax rates apply to dividend income.
  4. Investing

    Dividend Facts You May Not Know

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

    Due Diligence On Dividends

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

    3 Dividend Trends in the S&P 500 Index (TSN, LUV)

    Analyzing recent financial performance of companies demonstrating an inclination to issue consistent dividends to shareholders on a quarterly basis.
  7. Financial Advisor

    How Mutual Funds Pay Dividends: An Overview

    The process by which mutual fund dividends are calculated, distributed and reported is fairly straightforward in most cases. Here's a look.
  8. Investing

    The 3 Biggest Misconceptions of Dividend Stocks

    To find the best dividend stocks, focus on total return, not yield.
  9. Financial Advisor

    The Basics of Income Tax on Mutual Funds

    Learn about the basics of income tax on mutual funds, including what types of income may be subject to the capital gains tax rate.
Frequently Asked Questions
  1. Can coupon in fixed-income security effect bond yield maturity?

    See how fixed-income security investors can expect to use coupon on semi-annual payments if the bond or debt instrument is ...
  2. How are savings bonds taxed?

    Learn who is responsible for reporting U.S. EE savings bond interest for taxation and when the interest can be reported for ...
  3. What is the difference between inflation and deflation?

    Determine how inflation and deflation affect prices, employment, loans, and the central banks. Economies frequently teeter ...
  4. How does the foreign-exchange market trade 24 hours a day?

    Trading in the forex is not done at one central location, but is conducted by phone and electronic communication networks ...
Trading Center