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What are stock dividend dates?

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Quick Answer

The four dividend dates are important for the process of recording the distribution of the dividend to shareholders. These dates include the declaration date, date of record, ex-dividend date and payment date.

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What are stock dividend dates?
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Full Answer

The Board of Directors officially announces the future dividend on the declaration date. This announcement must include the amount of the dividend, the date of record and the payment date. This official announcement gives the company a legal responsibility to make the payment on the date set.

The date of record indicates when a shareholder must be in the company's records in order to get the dividend. On this particular day, the company makes a list of its shareholders, or its "holders of record." The people who are on this list receive proxy statements, financial reports and other company information germane to the dividend.

Once the company establishes the date of record, the National Association of Securities Dealers or the stock exchange sets the ex-dividend date. This is the last date before which an investor has the opportunity to purchase shares of stock in that company and be eligible for the declared dividend. If the sale takes place after the ex-dividend date, the seller of the stock gets the dividend. For example, if stock XYZ has a cash dividend, and the ex-dividend date is November 11, people who purchase shares on November 11 or later do not qualify for the dividend, but the seller gets it instead. Buying those shares on November 10 or earlier, though, entitles the investor to receive the dividend.

The payment date is the day on which the company pays the dividend. Those shareholders who held stock before the ex-dividend date receive the dividend.

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