What You Need to Know About Stock Dividend Dates
This date, also known as the announcement date, is the date on which a company declares it will pay a dividend.
Once a company declares that it will pay a dividend, it then sets the date--the record date--by which you must be a shareholder to receive the dividend.
Ex-Dividend Date (usu. record date - 2 for cash dividends, or record date + 1 for share dividends)
To further complicate matters, dividend-paying stocks also have what are called ex-dividend dates--usually two business days before the record date. If you buy or sell shares of stock between the ex-dividend date and the record date, the stock is said to trade without its dividend during that period. In practical terms, that means that the former owner of the stock--and not its new buyer--will receive the dividend if the transaction occurred on or after the ex-dividend date. If you buy a dividend-paying stock before the ex-dividend date, you will receive the upcoming dividend payment. The reverse is also true: If you sell your stock before the ex-dividend date, you give up your right to claim the dividend.
While cash dividends are the most common form of dividend payment, sometimes a company will pay a dividend in additional shares of the company rather than cash. In that case, the ex-dividend date is the first business day after the stock dividend is paid (and is obviously also after the record date). Thus, if you sell your stock before the ex-dividend date and the company has distributed additional shares, you have sold away your right to that stock dividend, too.
The payment date is straightforward: It's the date that dividend checks are mailed or deposited in shareholders' accounts.