Dividends Ex-Date Vs Record Date

Article byWallstreetmojo Team
Edited byPallabi Banerjee
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Dividends Ex-Date Vs Record Date?

The key difference between dividend ex-date and the record date is that dividend ex-date is the date till which the investor has to complete his purchase of the underlying stock to get the eligible dividend on the date listed for dividend payment.

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In contrast, the Record Date is the date decided by the top management, and it is the date on which the investor’s name should be present in the company’s books to get the dividend payment of particular security. However, it is equally important to understand the meaning of dividend in the entire process because both concepts originate due to dividend declaration by any company.

Dividends Ex-Date Vs Record Date Explained

The key difference between them is that the company’s management announces the record date along with the number of dividends. In contrast, the dividend ex-date depends on the record date and is usually two days before the record date.

To understand these two terms, record date vs ex dividend date, we must understand what dividends are all about. The dividend is a part of the distribution of profit/earnings in any organization and is paid to its shareholders only. The amount of dividend declaredDividend DeclaredDividend declared is that portion of profits earned that the company’s board of directors decides to pay off as dividends to the shareholders of such company in return to the investment done by the shareholders through the purchase of the company’s securities.read more has to be decided by the management at an annual general meeting of the company. There are four important dates that any investor or shareholder should know before investing in any stock or any company or when holding any dividend-paying stock.

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Infographics

Below are the differences in infographics that make the entire topic of record date vs ex-dividend date easy to understand and remember.

Dividends-Ex-Date-vs-Record-Date-info

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Key Differences

As we discussed earlier in this article, both dates, ex date and the record date for the dividend, are quite important when it comes to dividend payments to shareholders, but they have some differences. The main differences between these two dates are as follows:

  • The dividendThe DividendDividends refer to the portion of business earnings paid to the shareholders as gratitude for investing in the company’s equity.read more ex-date depends on the record date two days before the record date. The record date is announced by the company’s management, along with the number of dividends.
  • Dividend ex-date is much more important when buying or selling that particular stock, and it affects the dividend benefits from that stock. The record date is only a date from which the company’s management would get to know the list of the shareholders who will receive the latest announced dividend.
  • On Dividend Ex-date, stock prices get adjusted downwards by the amount of dividend announced. But the stock price on record date won’t be affected by the amount of dividend announced by the management.

The above details give us a summary of all the key differences between the two topics. It is written in a concise form which is easy to interpret.

Comparative Table

The comparative table gives us the differentiation of , ex date and record date for dividend, based on certain criterias like meaning, importance, eligibility and announcing authority.

BasisDividends Ex-DateRecord Date
MeaningThe stock exchangeStock ExchangeStock exchange refers to a market that facilitates the buying and selling of listed securities such as public company stocks, exchange-traded funds, debt instruments, options, etc., as per the standard regulations and guidelines—for instance, NYSE and NASDAQ.read more set the ex-dividend date. To get the dividend of a particular company, the stock should be bought by the investor by this date;By this date, the investor’s name should be in the company’s books to get the company’s dividend benefit.
Announced byStock Exchange / 2 days before the record date.Board of Directors of the Company
ImportanceMore important as the stock has to be bought on or before this date.Less important as compared to Ex-Dividend.
Eligibility criteriaShares bought post-Ex-Dividend date are not eligible for dividend distribution.Shares owned on or before the record date would be eligible for dividend distribution.

Example

Let’s understand the difference between these two important dates through an example.

Assume there is one company called Company A that declared and announced a dividend on April 20th, 2019, and the record date should be May 5th, 2019, as decided by the company’s management.

In this situation, we can understand all the dates as per the below table,

Sr.No.Type of DateDate as Per the ExampleRemarks
1Declaration DateApril 20th, 2019Company A announces and Declares a Dividend on this date.
2Ex-Dividend DateMay 3rd, 2019You should purchase this particular stock on or before this date. It would be two days before the record date.
3Record DateMay 5th, 2019If you purchased this stock on or before the ex-dividend date, you would be eligible to get dividend benefits.
4Payment DateJune 5th, 2019An investor listed in the books of the company on the record date will get dividend payments on this date;

Thus, from the above example, we get clarity in reading the entire process. Some important points to note are given below:

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