RE: READY FOE EX DIVIDEND9 Dec 2020 19:02
1. Declaration Date
The declaration date is the day that the company declares that it will pay a dividend. With this declaration, the company announces how much it will pay, the ex-dividend date, and the payment date. The declaration date is sometimes called the “announcement date” and most reliable dividend-paying companies keep to a regular declaration schedule (adjusting for weekends and holidays, of course). Likewise, companies generally now announce changes to their dividends along with earnings announcements or in separate press releases.
Declaration dates can be more significant for foreign companies, where payouts are often based as a consistent percentage of profits and where it is less common to “pre-announce” changes to the dividend.
2. Ex-dividend Date
As of the ex-dividend date, buyers of this stock will no longer be entitled to receive the declared dividend and the stock is said to thereafter trade “ex-dividend” (without dividend). Before trading opens on the ex-dividend date, the exchange marks down the share price by the amount of the declared dividend.
As an example, ABC Inc declares a $1 dividend with an ex-dividend date of January 10th. Anybody who buys the shares on the 7th, 8th, or 9th—or any date prior to the 10th—will get that dividend. When the stock opens on the 10th, it will be adjusted down by $1 from the 9th’s closing price. Anybody who buys on the 10th or thereafter will not get the dividend.
Another important note to consider: as long as you purchase a stock prior to the ex-dividend date, you can then sell the stock any time on or after the ex-dividend date and still receive the dividend. A common misconception is that investors need to hold the stock through the record date or pay date.
Ex-dividend dates are the single most important date to consider whenever buying a dividend-paying stock. Thus, we strongly encourage readers to use our ex-dividend calendar.
3. Record Date
The record date is simply the date where the company looks at its ledger and determines to whom they send the dividend checks (“the holders of record”). At present, the record date is always the next business day after the ex-dividend date (business days being non-holidays and non-weekends). This date is completely inconsequential for dividend investors, since eligibility is determined solely by the ex-dividend date.
4. Payment Date
As the name suggests, the payment date (or “pay date”) is the date on which a company actually pays out its dividend. Generally speaking, this date falls about two weeks to one month after the ex-dividend date.
Investors can use the Ex-Dividend Date Search tool to track stocks that are going ex-dividend during a specific date range. Ex-dividend dates are extremely important in dividend investing, because you must own a stock before its ex-dividend date in order to be eligible to receive its next dividend. From dividend.com website
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