Ex-Dividend Date vs. Record Date

What is a Dividend?

A dividend is a portion of a company's profits that is distributed to its shareholders. The amount of dividend to be paid is determined by the board of directors of the company. Dividends are typically paid out quarterly or annually.

What is the Ex-Dividend Date?

The ex-dividend date is the day on which a stock trades without the benefit of the next scheduled dividend payment. This means that if you buy the stock on or after the ex-dividend date, you will not be eligible to receive the next dividend payment. The ex-dividend date is typically one business day before the record date.

What is the Record Date?

The record date is the date on which the company's shareholder records are closed to determine who is eligible to receive the next dividend payment. Shareholders who are listed on the company's records as of the record date will be eligible to receive the dividend.

How do the Ex-Dividend Date and Record Date Relate?

The ex-dividend date and record date are important for investors to understand because they determine who is eligible to receive dividends. If you buy a stock before the ex-dividend date, you will be eligible to receive the next dividend payment. If you buy the stock on or after the ex-dividend date, you will not be eligible to receive the next dividend payment.

Here is a table summarizing the key differences between the ex-dividend date and record date:

Example:

Let's say that a company declares a dividend of Rs.10 per share on February 1st. The record date is set for February 15th. This means that shareholders who are listed on the company's records as of February 15th will be eligible to receive the Rs.10 per share dividend. The ex-dividend date is February 13th. This means that if you buy the stock on or after February 13th, you will not be eligible to receive the Rs.10 per share dividend.