Know Your Dividend Dates





Have you’ve ever been confused by the dividend dates terminology? You wouldn’t be alone. This review will navigate you through the dividend jargon. The key dates are the ex-dividend date; the record date or books closing date; and the payable or payment date. Fortunately for us, the only two dates that matter for investors are: the ex-dividend date and the payment date.

When do I need to buy the shares to get the dividend?

When a company announces a dividend, it also declares a books closing date. As we’ve earlier noted, can also be called the record date. Dividends are paid to all investors listed on the company’s share register at the record date. The investor must have purchased the shares at least one day before the ex-dividend date so that their holding is recorded on the share register at the record or books closing date. If the investor buys the shares on the ex-dividend date they are not eligible to receive the dividend.

After a company declares the books closing date, the ASX informs the market of the ex-dividend date. The ex-dividend dates are readily available in the financial press and broker websites.

If you buy a stock before the ex-dividend date, the stock is cum-dividend, and you’re entitled to the dividend. If you buy it on or after the ex-dividend date, then you will not receive the current dividend and the stock is considered ex-dividend. And that’s why it’s critical for traders to understand this particular date.

What happens after the ex-dividend date?

In theory, the share should fall in price on the ex-dividend date by the amount of the dividend. Its important not to worry if the share gaps down by a few percent overnight. You will receive your dividend payment usually between two and eight weeks later. It is worth checking the payable date as some companies take longer than others for the payment of dividends. All things are usually not equal so a share will typically fall a little more or less than the dividend, depending on all the other factors that affect it on the ex-dividend date.

Most dividend payments are made electronically on the payment date. Share holders will receive an email or mailed paper notification of the payment details depending on their communication preference that is recorded with the share register. However, many share holders still prefer to receive their dividend payments as a cheque – which is no doubt more satisfying but also more work as it needs to be banked.

Investors who participate in a dividend reinvestment plan (DRP) will receive shares in lieu of cash around this date.




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