Dividend Declaration Dates

Written by Robert Hodges

Published on November 22, 2019

As a dividend growth investor, there are certain dates one must be aware of, and understand, to help you understand when you will receive your dividends.

Announcement Date: (also called the “Declaration date”)

This is the date on which the company makes a formal statement announcing what the next dividend payment will be, and when it will be paid.  The board of directors of the company meets, usually on a quarterly basis, and decides what the next payment will be.  And then they put out a press statement declaring the amount of the dividend, and on what date the stockholders will receive the payment.  Based on this date, investors can figure out when the EX-DIV date will be (although that too is usually announced).

Ex-Div date:

The Ex-Div date is the date on which an investor in that stock will no longer receive the upcoming dividend.  It is NOT the day after the dividend is paid, as one might expect.  Usually it is two to three business days before the RECORD DATE.  An investor must buy the stock at least one day before the ex-div date in order to receive the dividend. If an investor purchases the stock on its ex-dividend date or after, they will not receive the next dividend payment.

Record Date:

This is the day the company looks to see who owns shares of its stock, and therefore who should receive the dividend.  When someone buys a share of stock it takes 1-3 days for that person to become a stockholder of record.  It takes that much time for the transaction to “settle”.  For most US stocks it takes 3 days.  So, if an investor buys the stock on Nov 16th, they don’t become a stockholder of record until Nov 19th (assuming they are all business days).  Conversely, if they sell the stock on Nov 16th, they would still be the stockholder of record on Nov 18th, as it usually takes three days for the trade to settle.

Payment Date:

The payment date is the date on which the dividend is deposited into your account, or a check is sent to the owner’s address.  This is the day the money is yours.

An important note here about the stock price.  Because the company will be paying out a dividend to anybody who is a shareholder of record on the ex-div date, the stock price will automatically drop by the amount of the dividend, when trading opens on the ex-div date.  So, if a stock is paying a .50/share dividend and was trading for $50 at the market close on the day before, on the ex-div day it will open at $49.50 (assuming no other market forces would make the stock open higher or lower).  Most of the time stocks open higher or lower than where the closed the day before anyway, so the difference due to the dividend payment is usually hidden by the normal overnight ups and downs of the stock price.  But with stocks that pay a relatively higher dividend, you may notice a drop-in price at market open on the ex-div day.

What does this all mean to us?

Here is an actual dividend declaration from Roper technologies (ROP)

ROP : Roper declares $0.5125 dividend • 7:01 AM

  • Roper (NYSE:ROP) declares $0.5125/share quarterly dividend, 10.8% increase from prior dividend of $0.46
  • Forward yield 0.59%
  • Payable Jan. 23; for shareholders of record Jan. 9; ex-div Jan. 8.

This declaration tells us all we need to know if we are interested in buying ROP to collect the dividend, or if we own ROP, and want to make sure we collect the dividend before we sell it.

The announcement date was Nov. 15th, and the dividend announced was 0.5125/share.

The dividend will be paid only to people who are owners of record on January 9th.

The Ex-Div date will be January 8th.

The Payment date will be Jan 23rd.

Let’s assume we want to buy ROP to collect the 0.5125/share dividend.  Even though the dividend will not be paid until Jan 23rd, we must purchase it by Jan 7th in order to receive the dividend.  Remember, the ex-div date is the first day a person WILL NOT receive the dividend if they buy it on that day.  You must have owned it the day before the ex-div date.  If we buy it on Jan 7th, we will be shareholders of record on Jan 9th, and we will receive the dividend on Jan 23rd.

Conversely, if we own ROP, but are considering selling it for some reason, but we want to receive one more dividend before we sell it, we must hold it until Jan 8th, to ensure that we receive it.  On Jan 8th, or any day after, we can sell the stock and still receive the dividend on Jan 23rd.

Does this matter to us?

Well, yes, and no.  As dividend growth investors we think long term.  We buy and hold stocks for many years.  Maybe even decades.  So, over the long term the different dividend related dates are meaningless.  But if we’re buying a new position you might want to check on the latest dividend announcement to see if the ex-div date is approaching.  If so you may decide to buy it sooner, before the ex-div date, to ensure that you receive the upcoming dividend.  Or you may choose to wait for the ex-div date, hoping to buy the stock at a lower price, lower by the amount of the dividend to be paid.  Conversely, if you are selling the stock, you might want to make sure you hold it until the next ex-div date to make sure you receive the next dividend.  In the long run, for most dividend paying stocks, it won’t make much of a difference.

However, when you’re in retirement, and you depend on your dividend income to pay for your living expenses, it is important to understand the different dates to know when you will receive your money, or to know how many more days you must hold on to a stock before selling, to make sure you get that last dividend payment.

At PTI, we don’t worry about these different dates, because we are long-term stockholders.  But as our readers learn more about dividend investing, we assume in their readings that they will come along these terms.  So, we thought it would be wise and helpful to post an article explaining them.  Please contact us if you have any questions about what you’ve read here.

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