The record date is the cutoff established by a company to determine the shareholders eligible to receive a dividend or distribution. This pivots from the ex-dividend date, when the stock started trading without the value of its next dividend payment.
Key Takeaways
The record date is the cutoff to determine which shareholders receive a corporate dividend.
The record date will usually be the trading day following the ex-dividend date, which is the trading date the dividend is no longer owed to new buyers of the stock.
To be eligible for the upcoming dividend, you must buy the stock at least two business days before the record date.
The record date is needed to decide the list of the company's shareholders since shareholders are constantly changing. The shareholders of record on the record date are entitled to receive the company's dividend or distribution.
Understanding the Record Date
The record date is essential because of its relation to another key date, the ex-dividend date. On and after the ex-dividend date, buyers of the stock don't receive the dividend; the sellers, presuming they hadn't bought it in quick transactions after the record date, receive it, which occurs on the payable date.
The company's record date should be known before trading dividend-paying stocks.The ex-dividend date is set precisely one business daybefore the record date in the U.S. This is because of the "T+2system" used in North America, where stock trades are settled two business days after the transaction is carried out. When an investor buys a stock one business daybefore its record date, the trade settles the day after the record date, and this person wouldn't be the shareholder of record for receiving the dividend.
Different rules apply when the dividend is 25% or more of the stock value, which is relatively rare. The Financial Industry Regulatory Authority says the ex-date is the first business day following the payable date. In other words, you're entitled to dividends or distributions worth 25% or more of the share price if you buy the stock at least a day before the pay date.
To ensure you're in the record books, you need to buy the stock at least two business days before the date of record or one day before the ex-dividend date.
Example of a Record Date
Assume company Alpha has declared a dividend of $1, payable on May 1, to shareholders of record as of April 10. The record date is, therefore, April 10, and the ex-dividend date is one business daybefore the record date, or April 9 (if April 9 to 10 are in the middle of a typical week).
If investors want to receive the dividend from Alpha, they must buy the stock before its ex-dividend date. If they buy Alpha shares on April 8, their trade will be settled on April 10; since they are a shareholder of record as of April 10, they will receive the dividend. However, if they buy Alpha shares on April 9, the ex-dividend date, their trade will be settled on April 11, too late to receive the dividend.
Record Date vs. Ex-Dividend Date
The record date and the ex-dividend date are both pivotal for dividend-paying stocks. The record date is when the company determines the roster of shareholders who receive the dividend. The ex-dividend date—set one trading day before the record date—kicks off when new buyers no longer have the right to the payout.
If you want to be on the books as a shareholder of record in time to receive a dividend, the latest you can buy is the day before the ex-dividend date or two days before the record date.
Will I Get a Dividend If I Buy a Stock on the Record Date?
No, you wouldn't receive it. To qualify for the dividend, you need to be a shareholder of record on the record date. This means buying your shares at least one day before the ex-dividend date or two days before the record date.
What Happens If I Buy Shares on or After the Ex-Dividend Date?
If you buy a stock after its ex-dividend date, which in U.S. markets is the day before the date of record, you will not be entitled to the dividend. Instead, the seller receives the dividend since they were the shareholder of record on the record date.
What Happens If I Sell a Stock on the Record Date?
You are still entitled to the dividend if you sell a stock on its record date. Since the ex-date has already passed, it's the seller, not the buyer, who's on the books as the shareholder on the record date.
The Bottom Line
The record date, also known as the date of record, is when a company offering a dividend or distribution establishes its list of shareholders who will receive the payout. The record date generally occurs a day after the ex-dividend date, the first trading day when new buyers no longer qualify for the dividend.
You must be on the books as a shareholder on the record date to collect a dividend. For North America's T+2 settlement system, this means buying at least two days before the record date.
The record date, also known as the date of record, is when a company offering a dividend or distribution establishes its list of shareholders who will receive the payout. The record date generally occurs a day after the ex-dividend date, the first trading day when new buyers no longer qualify for the dividend.
Record date, also known as the cut-off date, is the specific day on which a company finalises the list of shareholders eligible for its forthcoming dividend distribution. An organisation whose stocks are actively traded in the stock market expects to see a constant flux in the list of shareholders.
On March 10, 2020, ABC Company notifies its shareholders that a dividend will be paid on April 12, 2020. ABC further stipulates that all shareholders that are registered on the company's books before March 25, 2020, will be eligible for the dividend payment.
When a company declares a dividend, it sets a record date when you must be on the company's books as a shareholder to receive the dividend. Companies also use this date to determine who is sent proxy statements, financial reports, and other information.
The ex-date is one business day before the date of record. The date of record is the day on which the company checks its records to identify shareholders of the company. An investor must be listed on that date to be eligible for a dividend payout.
If investors want to receive the dividend from Alpha, they must buy the stock before its ex-dividend date. If they buy Alpha shares on April 8, their trade will be settled on April 10; since they are a shareholder of record as of April 10, they will receive the dividend.
Definition: The issuing company fixes a particular date when the investor must own shares in order to be eligible to participate in corporate events like receiving dividend, bonus shares etc. This is called record date.
You should buy the particular stock on or before this date. Ex-date is generally two days before the record date; in this case, the record date will be May 5th, 2022.
The declaration date is the date on which the board of directors announces and approves the payment of a dividend. The declaration includes the size of the dividend being issued and outlines the record date and payment date.
The declaration date is the day a company's board declares the company's dividend, which comes before payment. Most companies pay dividends quarterly, declaring them four times a year. The payment date is the day the company issues dividend payments to shareholders and can be a week after the record date.
Date of Recording means the day immediately prior to the Payment Date when the relevant securities depositary is open for recording in the relevant currency.
The record date is set by the board of directors of a company and refers to the date by which investors must be on the company's books in order to receive a stock's dividend. A stock's price usually drops by the amount of the declared dividend on the ex-dividend date.
When a company announces a dividend, the board of directors set a record date. Only shareholders recorded on the company's books as of that date are entitled to receive the dividends. The ex-dividend date is determined based on a stock exchange's rules and is usually set one or two days before the record date.
The date on which a shareholder must be registered as the owner of shares in order to receive a dividend or other entitlement. Also, in the context of a rights issue, the reference date for entitlement to nil paid rights.
Ex-Date: The date on which a stock starts trading without the benefit of corporate action, i.e., ex-benefit, is known as the ex-date. The ex-date and the record date for all the corporate actions are on the same day since all the instruments are moved to the T+1 settlement cycle.
The record date: The date that determines all shareholders of record who are entitled to the dividend payment. This date usually occurs two days after the ex-date. The payment date: This is the day dividend payments are issued to shareholders and is usually about one month after the record date.
For investors, the ex-dividend date vs. record date battle is no contest — the ex-dividend date is the most important day on the dividend calendar. If you're investing for dividends, you must maintain awareness of the ex-dividend date since investors must own shares before it arrives.
Conversely, the record date for the dividend serves as a cutoff point for determining dividend entitlement. Shareholders listed in the company's records as of the record date are entitled to receive dividends, reflecting their ownership status at that moment.
Bonus shares are usually announced by the company with a record date, the date which is considered for the bonus shares. All the investors holding the shares on the record date are eligible for bonus shares. Company usually gives bonus shares as a substitute of dividend payouts.
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