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Dividends EX-Date vs Record Date

By Madhuri ThakurMadhuri Thakur

Home » Finance » Blog » Accounting Fundamentals » Dividends EX-Date vs Record Date

Dividends-Ex-Date-Vs-Record-Date

Difference Between Dividends EX-Date vs Record Date

Ex-Dividend Date: Ex-Dividend date is two days before the record date. This is because trade gets settled in T + 2 days. The owner of the stock on the day before the 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: A record date Is a date on which day whomsoever will hold the share will receive the dividend. An investor must buy shares prior to the ex-dividend date to own them on the record date and to be eligible for the dividend. Even though investors holding shares from months and selling shares just before the ex-dividend date will disqualify investors from the dividend payment.

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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 the company’s board of directors announces its approved dividend payment. On the declaration date, a board of directors announces the record date & the payment date.

Payment date: Payment date Is on which actual dividend is paid via bank account transfer or via checks.

Example of the dividend important dates

Type

Date

Notes

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 DateDividends EX-Date vs Record Date Infographics

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

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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.

The record date is announced by the management. A buyer on the ex-dividend date will not be eligible for the dividend but the seller will be eligible for the dividend.

Comparison Table

Below is the 5 topmost comparison between Dividends EX-Date vs Record Date

Parameter Ex-Dividend Date Record Date
Occurrence Two days prior to record date ( because of T + 2 days settlement ) Announced by management
Announced by management

No

Yes

Payment of dividend made

No

No

Eligibility for dividend is decided

No

Yes

Share price gets adjusted by the amount equivalent to a dividend

Yes

No

Conclusion

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.

Recommended Articles

This has 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.

  1. Positive Economics vs Normative Economics
  2. Financial Accounting vs Management Accounting
  3. Differences between Assets and Liabilities
  4. Growth Stock vs Value Stock

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