Date of Record

The date on which a corporation uses its list of stockholders to mail a dividend check. It is usually two days after the ex-dividend date. Also called record date.
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Definition

The date of record, also referred to as the record date, is a crucial financial date that determines which shareholders are eligible to receive a declared dividend. On this date, a corporation examines its list of stockholders to identify those who will be sent the dividend payment. Typically, the date of record is set two business days after the ex-dividend date.

Examples

  1. Example 1: A corporation declares a dividend on January 10 and sets the ex-dividend date for January 15. The date of record would likely be January 17. Shareholders who are on the company’s books as of January 17 will receive the dividend.

  2. Example 2: Company XYZ announces a dividend on July 1 and decides the ex-dividend date is July 8. The date of record might be set for July 10. Investors who purchase the stock before July 8 will be eligible for the dividend, while those who buy on or after July 8 will not. Only shareholders recorded by July 10 will receive the payment.

Frequently Asked Questions (FAQ)

Q1: Can a stockholder sell shares before the date of record and still receive the dividend?

  • A1: Yes, if a stockholder sells their shares after the ex-dividend date but before the date of record, they will still receive the dividend because they were the holder of record on the date of record.

Q2: Why is the date of record important for investors?

  • A2: The date of record is crucial for investors as it determines who will receive the dividend earnings. Understanding the relationship between the ex-dividend date and the date of record can influence timing decisions on buying or selling shares.

Q3: What happens if an investor buys shares on the ex-dividend date?

  • A3: If an investor buys shares on or after the ex-dividend date, they will not be eligible to receive the next dividend payment, as they will not be recorded as stockholders by the date of record.

Q4: Is the date of record the same for all corporations?

  • A4: No, the date of record can vary for different corporations and specific dividend declarations. Each company has the discretion to set its date of record.

Q5: How is the date of record communicated to stockholders?

  • A5: Corporations usually announce the date of record through press releases, official financial filings, and notifications to stock exchanges.
  • Ex-Dividend Date: The ex-dividend date is the cut-off date after which new buyers of the stock will not be entitled to the next dividend payment.
  • Dividend Yield: A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.
  • Payable Date: The date on which a declared stock dividend is scheduled to be paid.
  • Dividend Declaration Date: The date on which a company’s board of directors announces a dividend distribution to shareholders.
  • Stockholder of Record: An investor who is documented as the owner of shares on the record date.

Online References

  1. Investopedia: Record Date
  2. The Motley Fool: Ex-Dividend Date and Record Date
  3. NASDAQ: Dividend Dates Explained

Suggested Books for Further Studies

  1. “Dividends Still Don’t Lie: The Truth About Investing in Blue Chip Stocks and Winning in the Stock Market” by Kelley Wright.
  2. “The Ultimate Dividend Playbook: Income, Insight and Independence for Today’s Investor” by Josh Peters.
  3. “Common Stocks and Uncommon Profits” by Philip Fisher.

Fundamentals of Date of Record: Finance Basics Quiz

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Thank you for exploring the crucial aspects of the Date of Record in finance. Happy learning and investing!

Dating in Commercial Transactions
Date of Issue