Post by fastwalker on Oct 1, 2004 20:35:49 GMT -5
Source: BARTThe following information pertains to dividend dates of listed securities.
There are typically three dates referenced with the payment of a dividend; the ex-dividend date, the record date, and the payable date.
As a rule, the ex-dividend date is the most significant date to keep in mind. The ex-dividend day is the first day a stock trades without a declared dividend. The price of the stock is adjusted prior to market open on the ex-dividend date to reflect the price without the value of the dividend. This date is typically not referenced in the company's press release, as it is set by the NASD or the exchange after the announcement. If the exchange does not set an ex-dividend date, shareholders with settled positions on the record date will be entitled to the dividend payment.
Shares that are purchased on or after the ex-dividend date are purchased at this lower price and therefore, are not entitled to the dividend payment. Shareholders who sell their shares prior to the ex-dividend date sell the shares with the dividend still attached; in other words, they sell the security and the expected dividend.
Therefore, if one buys shares prior to the ex-dividend date and holds the shares until after market open on the ex-dividend date, they will receive the dividend.
The Record Date is a commonly used term generally referred to in press releases and other news stories. The date of record is a date used by Corporations and Transfer Agents. The record date is used for corporate bookkeeping. Record date typically does not determine who is entitled to the dividend; it merely indicates to whom the transfer agent will need to deliver the shares. If a person holds shares on the record date but sells the shares prior to the ex-dividend date, they will need to deliver the dividend with the shares. Dividends are attached to shares, not people, so if shares are sold prior to the ex-dividend date, the dividend goes with the shares.
The Payable Date refers to the day the company or paying agent will pay out the dividend. This typically occurs after market close on the payable date. Payable date is generally after the ex-dividend date on cash dividends and prior to the ex-dividend date of stock splits and spin-offs.
Please keep in mind there are different types of dividends, the most common being the cash dividend. However stock splits, stock distributions, and spin-off are all considered dividends and therefore, similar principles apply. Although most securities follow the rule of ex-dividend date, this will vary with different exchanges; as a result we suggest you request information on a specific security to ensure accurate information.
