Dividends Ex-Date vs Record Date

Dividends Ex-Date vs Record Date Differences

Dividend ex-date and the record date is that the record date is announced by the management of the company along with the amount of dividend, whereas, the Dividend ex-date depends on the record date and is usually two days prior to the record date.

To understand these two terms, we have to understand what is dividend all about. Basically, the dividend is a part of the distribution of profit/earning in any organization and it is paid to its shareholders only and the amount of dividend declared has to be decided by the management at an annual general meeting of the company. There are four important dates which any investors or shareholder should know before investing in any stock or any company or when holding any dividend paying stock.

• Declaration Date: When the board of directors of the company announces or declare the payment of dividend which includes the size of the dividend, record date or payment date.
• Ex-Dividend Date: Ex-Dividend date is more important to keep in mind to get the benefits of dividend benefits. This date is two days prior to the record date, a shareholder should purchase shares of that particular company on or before the ex-dividend date. In India, the stock settlement is on a T+2 basis, which means if you purchased shares today, you will receive the stock in your bank account after 2 business days, that is the date when your name as a shareholder would be listed in the books of the company.
• Record Date: Dividend Record date is the date at which the investor has to be in the company’s books as an investor to get the benefits of the Dividend. Post this date, the investor would not be eligible for dividend benefits.
• Payment Date: The payment date is the date at which all eligible investors would get the amount of dividend to their accounts.

Dividends Ex-Date vs Record Date Infographics

Here we provide you with the top 4 difference between Dividends Ex-Date vs Record Date

Dividends Ex-date vs Record Date Key Differences

As we discussed earlier in this article, both dates are quite important when it comes to a dividend payment to shareholders, but both have some difference between them. The main differences between these two dates are as follows:

• Dividend ex-date depends on the record date, which is two days prior to the record date. The record date is announced by the management of the company along with the amount of dividend.
• Dividend ex-date is much more important when it comes to buy or sell of that particular stock and it affects the dividend benefits from that stock. The record date is only a date, from which the management of the company 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.

Dividends Ex-Date vs Record Date Head to Head Differences

Let’s now look at the head to head differences Dividends Ex-Date vs Record Date:

Basis		Dividends Ex-Date		Record Date
Meaning		The ex-dividend date is set by the stock exchange. To get the dividend of a particular company, the stock should be bought by the investor by this date.		By this date, the name of the investor should be in the books of the company to get the dividend benefit of that company.
Announced by		Stock Exchange / 2 days prior to the record date.		Board of Directors of the Company
Importance		More important as the stock has to be bought on or before this date.		Less important as compared to Ex-Dividend.
Eligibility criteria		Shares bought post-Ex-Dividend date are not eligible for dividend distribution		Share owned on or before record date would be eligible for dividend distribution.

Dividends Ex-Date vs Record Date – Example

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

Assume, there is one company called Company A declare and announce dividend on April 20^th, 2019 and record date should be May 5^th, 2019 as per decided by the management of the company.

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

Sr.No.		Type of Date		Date as Per the Example		Remarks
1		Declaration Date		April 20th, 2019		Company A announced and Declare Dividend on this date.
2		Ex-Dividend Date		May 3rd, 2019		You should purchase this particular stock on or before this date. It would be 2 days before the record date.
3		Record Date		May 5th, 2019		If you purchased this stock on or before the ex-dividend date, you would be eligible to get dividend benefits.
4		Payment Date		June 5th, 2019		An investor who has been listed in the books of the company on the record date will get dividend payment on this date.

Conclusion

• The record date is announced by the board of director on or before which, the shareholder must own the share of that particular company for being able to receive the dividend payment. However, buying stock on the record date will not make you eligible to get the company’s dividend.
• The most important date in dividend situation is to aware about ex-dividend date, as the record date would be announced by the management of the company, but the ex-dividend date would be calculated by the stock exchange as it affects by weekly or functional holidays as well. If there is no holiday, then ex-dividend date would be 2 days prior to the record date. The reason behind the ex-dividend date is 2 days prior to record day, is because it takes 3 days (T+2 settlement days) for a trade to settle in the stock exchange.
• On the ex-dividend date, the stock price of that particular stock gets adjusted downwards by the amount of the dividend announced by the management of the company. But the market is affected by several other factors also so some time this downwards in pricing are not visible on ex divided date as well.
• On the Record date and Dividend Payout dates, there is no price adjustment by the exchange due to a dividend.
• All these dates are business dates on which stock exchange works, but not calendar dates.

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