The Ex-dividend Date

Where dividends are concerned, a few days can make a big difference.

There are four important dates to keep in mind:

1. The declaration date is the date that corporate directors declare a dividend and issue a press release to that effect.

2. The date of record is the date that an investor must be registered on the books of the corporation as a shareholder in order to receive the declared dividend.

3. The ex-dividend date is a date normally four business days prior to the date of record. It is the period allowed for bookkeeping entries associated with stock delivery and account settlement.

4. The payment date is the actual date that dividend checks will be received by shareholders of record or, if the dividends are being reinvested (as in a DRIP account), will be used to purchase additional shares.

The date to watch out for is the ex-dividend date. If stock is purchased before this date, the investor is entitled to the dividends as of the payment date. If stock is purchased after the ex-dividend date, it will be delivered without the dividend. In other words, if the stock is sold after the ex-dividend date, the previous owner will receive the dividend; and if it is sold before the ex-dividend date then the dividend goes to the new shareholder.

You can easily find the ex-dividend date listed in Barron's or the Wall Street Journal.

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