Ex-Dividend Date
Before purchasing any company’s stock, investors need to pay attention to two dates which is the record date and ex-dividend date. Ex-dividend date is the term that sets the shareholder who will be entitled to receive the dividend.
The company will prepare the record after managements decide to declare a dividend to the investors. This record is the listing of shareholders’ name who own the company’s share on the record date. They will only share dividend to the shareholders whose name on the record. Ex-dividend date is usually one or two days early than the record date as it depends on the capital market rule.
If the investors buy shares after the ex-dividend date, their name will not present on the record, which means that they will not receive the dividend. The seller still entitles to get dividend even they already sold the shares.
Other Dividend Date
Declaration date
It is the date which the board of directors declare dividend payments to shareholders. The company will issue a press release to announce the dividend and include the ex-dividend date, record date, and payable date.
Record Date
It is the day after the ex-dividend date which enables the company to decide who is entitled for the dividend. Only the shareholders whose names on company record will receive the dividend.
Payable Date
It is the date when dividends due to all shareholders.
Example of Dividend Date
On 05 July 202X, Company A declares about the dividend to shareholders. They decide to pay $1 dividend for each share hold. Based on the announcement, the date is the following:
| Declaration date | Ex-Dividend Date | Record Date | Payable Date |
| 05 July 2020 | 09 July 2020 | 10 July 2020 | 11 July 2020 |
Based on Nasdaq’s rule, the ex-dividend day is only one day before the record date.
On 09 July 2020, Mr. A purchases 1,000 shares of this company. However, as it is the ex-dividend date, so Mr. A will not receive the dividend on 11 July 2020. The dividend will be transferred to the previous holders.
