Record Date

When a company declares a dividend, it announces several dates. The declaration date is when the dividend is approved. The record date is when the company determines who its shareholders are. The payment date is when the money is actually paid.

Only investors listed as shareholders on the record date receive the dividend. Because share purchases take time to settle, buyers must purchase the shares before the ex-dividend date, which is set by the exchange in relation to the record date, to appear on the register in time.

For example, a company might declare a dividend on 1 June, with a record date of 15 June and a payment date of 1 July. An investor who owns the shares at the close of the record date, having bought them before the ex-dividend date, will receive the payment on 1 July.

Record dates are also used for other corporate actions, such as rights issues, voting at shareholder meetings and share splits, to determine which shareholders are entitled to participate.

For most investors, the ex-dividend date is the more practical date to watch, since it determines whether a purchase or sale includes the right to the upcoming dividend.