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Dividends

What is the ex-dividend date?

What is an ex-dividend date and why is it important to a dividend-focused investment portfolio?

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. This is the focus of dividend investing, which is what I’m using to become financially independent.

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 DateEx-Dividend DateRecord DatePayable Date
16/09/202012/11/202013/11/202025/11/2020

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.

By Rich Edmonds

Rich creates content for the top Windows-focused publication, but by night he tries to make his money work for him and rambles far too much here.

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