How a company determines whether you should receive a dividend is by using two dates: ex-dividend and record. You’ll need to have shares held in a company by these stated dates in order to receive a dividend payment.
The record date is when the dividend payment is finalized to all registered shareholders. You need to have shares purchased prior to this date in order to receive a dividend. The ex-dividend date is simply one trading day prior to the record date.
You’ll find out what the two dates are when the company declares a dividend payment. Here’s how it works:
|Declaration Date||Ex-Dividend Date||Record Date||Payable Date|
If you want to receive a slice of the dividend pie, you’ll need to have your shares purchased before the ex-dividend date. If you purchase shares on the day or after, the seller who sold you the shares will receive the dividend payment.
On 16/09/2020, your favorite company announces a dividend with a record date of 13/11/2020. The ex-dividend date would then be 12/11/2020. The payable date of 25/11/2020 is simply when the dividend would be paid out to shareholders.
If you buy a share on or after the ex-dividend date, the seller will receive the dividend payment. Likewise, if you sell a share on or after the ex-dividend date. So make sure you get your shares in before the ex-dividend date, else you’ll be reimbursing the seller the amount that should have lined your pocket.