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 (alternatively know as the books closing date); and the payable or payment date. Fortunately for us investors, 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 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 date. It is important to know that if the investor buys the shares on the ex-dividend date they are not eligible to receive the dividend.

If you buy a stock before the ex-dividend date, the stock is considered cum-dividend -meaning that you are 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. 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. This is normal and the shareholder should 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.

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.

What happens if I don’t recieve my dividend?

If you have not received the expected dividend on or after the payable date then it is possible the Share Registry does not have you bank account details. Lookup the share registry for the company and contact them. They have procedures in place to deal with missing dividends.