Difference Between Dividends EX-Date vs Record Date
A dividend is a profit distributed to a shareholder by the company. To understand the basics of dividend one must understand four important dates regarding dividend
- Declaration Date
- The Ex-Dividend Date
- The Record Date
- The Payment Date
Declaration date: The date on which company’s board of directors announces its approved dividend payment. On the declaration date, a board of directors announces record date & the payment date.
Ex-Dividend date: Ex-Dividend date is two days before the record date. This is because trade gets settled in T + 2 days. Owner of the stock on the day before ex-dividend date will receive the dividend. Ex-dividend date onward, the new buyer of the stock will not get a dividend.
A stock price decreases on the ex-dividend date by an amount roughly equal to the dividend paid, because dividend decreases a company’s asset and this will reflect in the stock price.
Record date: Record date Is a date on which day whomsoever will hold the share will receive the dividend. An investor must buy share prior to ex-dividend date to own them on the record date and to be eligible for the dividend. Even though investor holding shares from months and selling share just before ex-dividend date will disqualify investor from dividend payment.
Payment date: Payment date Is on which actual dividend is paid via bank account transfer or via checks.
Example of the dividend important dates
|Declaration Date||July 21, 2017||Infosys announced a dividend|
|Ex-Dividend Date||Sep 14, 2017||The date before which you must buy the share to be eligible for dividend payment.|
|Record Date||Sep 16, 2017||The date on which you must be on the books as a shareholder to receive the dividend|
|Payment date||Oct 2, 2017||The date on which Infosys pays a dividend to its shareholders. Investors who were on the book as a shareholder as on Sep 16, 2017, will get a dividend.|
Head To Head Comparison Between Dividends EX-Date vs Record Date (Infographics)
Below is the top 5 difference between Dividends EX-Date vs Record Date
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Key Differences Between Dividends EX-Date vs Record Date
Both Dividends EX-Date vs Record Date are popular choices in the market; let us discuss some of the major Difference Between Dividends EX-Date vs Record Date
The ex-dividend date is two days prior to the record date.
Stock price gets adjusted by the amount of dividend on the ex-dividend date.
Record date is announced by the management. Buyer on ex-dividend date will not be eligible for the dividend but seller will be eligible for the dividend.
Dividends EX-Date vs Record Date Comparison Table
Below is the 5 topmost comparison between Dividends EX-Date vs Record Date
Conclusion – Dividends EX-Date vs Record Date
In order to be eligible for the dividend,
- You should buy shares before the ex-dividend date
- You should be on the book as a shareholder on the record date announced by the management at the time of declaration.
- Stock price gets adjusted almost equivalent to the dividend declared amount.
- If you purchase stock after the ex-dividend date or on the ex-dividend date you will not be eligible for the dividend.
- If you are eligible for the dividend, you will receive a dividend on the payment date.
This has a been a guide to the top difference between Dividends EX-Date vs Record Date. Here we also discuss the Dividends EX-Date vs Record Date key differences with infographics, and comparison table. You may also have a look at the following articles to learn more.