Companies that intend to pay out dividends will publish important dates for investors to pay attention to. Generally, in the dividend distribution schedule, be it cash dividends or interim dividends, a company must include date information such as announcement date, cum date, ex-date, recording date, and payment date.
Important Dividends Dates
There are four of the most important dates that you need to know about when you are holding a dividend-paying stock:
1. Announcement Date
The announcement date is the date on which the board of directors announce the dividends and approves the payment of a dividend. The announcement includes the size of the issued dividend and outlines the record date and payment date.
For example: On July 15, a company may report that “company announce a quarterly dividend of 50 cents per share to shareholders of record as of August 10.”
2. Cum Date
Cum date is the last date for investors who want to buy certain stocks and be eligible to receive the announced company’s dividends. Simply, investors are eligible to receive dividends if they have purchased the stock up to the cum date at the last. Therefore, investors need to pay attention to the cum date to receive the dividends that have been determined by the company.
3. Ex-dividend Date
One day after the cum date is called the ex-date. The ex-dividend date is the first date that a stock trades without a dividend. Investors who purchased the stock on the ex-dividend date will not be eligible to receive dividends. For example, the ex-dividend date of a stock is on March 10. Investors or stockholders who purchase the stock on or after the ex-dividend date will not receive dividends. However, stockholders who purchased the stock one day before the ex-date will receive the dividend.
4. Record Date
The date of record is the date when stockholders are identified as eligible to receive a dividend or distribution. Investors must be on the company’s books in order to receive dividends. The company will record investors who have purchased stock up to the cum date. The recorded stockholders will receive a predetermined dividend.
5. Payment Date
The payment date is the date on which the stockholders receive dividends. They can nail or transfer dividends electronically to the account of stockholders. The company distributes dividends according to the portion of shares owned by investors. Generally, the payment date is 10 days to 21 days after the ex-dividend date.
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