The main difference between the record date and the ex-dividend date is that the record date is when a company notes who its shareholders are to pay dividends. In contrast, the ex-dividend date is one business day before the record date, determining eligibility for the dividend.
Content Id:
- What is the Ex-Dividend Date?
- What is the Record Date?
- Ex-Dividend Date Vs Date Of Record
- Difference Between Ex-Dividend Date and Date of Record – Quick Summary
- Record Date Vs Ex-Dividend Date – FAQs
What is the Ex-Dividend Date?
The ex-dividend date is a specific date set by a company, marking when a stock begins trading without the value of its next dividend payment. If you purchase the stock on or after this date, you’re not eligible to receive the declared dividend.
The ex-dividend date is established by the stock exchange and occurs one business day before the record date. It’s the crucial cut-off for determining dividend eligibility. If you buy a stock before this date, you’re entitled to the upcoming dividend.
If you purchase the stock on or after the ex-dividend date, the dividend will go to the seller, not you. This date ensures clarity on who receives the dividend, reflecting in the stock price, which typically drops by the dividend amount on this day.
For example: If a company’s ex-dividend date is March 10th, you must own the stock before this date to receive its dividend. Buying on March 10th or later disqualifies you.
What is the Record Date?
The record date is set by a company to determine which shareholders are eligible to receive a dividend or distribution. It’s the date when a company reviews its records to identify shareholders of record for dividend payments. Only shareholders listed on this date will receive dividends.
The record date is a key date established by a company when it decides to issue a dividend. On this date, the company reviews its records to determine who its shareholders are.
Only shareholders listed in the company’s records on this date are eligible for the dividend. It’s a cut-off point for the company to identify those entitled to receive the dividend payment.
For Example: If ABC Corporation declares a dividend with a record date of April 10th. Only shareholders who are on ABC Corporation’s books as of April 10th will be eligible to receive the dividend.
Ex-Dividend Date Vs Date Of Record
The main difference between the ex-dividend date and the record date is that ex-dividend date is when a stock starts trading without its upcoming dividend included, while the record date is when the company lists eligible shareholders to receive the dividend.
| Aspect | Ex-Dividend Date | Record Date |
| Definition | The day when a stock starts trading without the dividend included. | The day a company reviews its records to determine dividend eligibility. |
| Timing | Occurs one business day before the record date. | Follows the ex-dividend date. |
| Shareholder Eligibility | To receive a dividend, shares must be purchased before this date. | Shareholders listed on this date are eligible for the dividend. |
| Stock Price Impact | Stock price typically drops by the amount of the dividend on this day. | No direct impact on stock price. |
| Purpose | To clarify the cut-off for dividend eligibility. | To officially identify shareholders eligible for the dividend. |
| Trading Impact | Buying a stock on or after this date means not receiving the upcoming dividend. | Buying a stock before this date ensures dividend eligibility. |
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Difference Between Ex-Dividend Date and Date of Record – Quick Summary
- The main difference is that the ex-dividend date is when a stock is traded without the upcoming dividend, while the record date is when a company identifies shareholders eligible to receive that dividend.
- The ex-dividend date marks when a stock trades minus its upcoming dividend value. Buying the stock from this date onwards disqualifies you from receiving the current dividend, as it’s set for prior shareholders.
- A company establishes a record date to identify eligible shareholders for dividends or distributions. On this date, the company checks its records to determine which shareholders are listed for receiving the dividend.
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Record Date Vs Ex-Dividend Date – FAQs
The main difference is that the ex-dividend date is the first day a stock trades without its dividend included, while the record date is when a company records who its shareholders are for dividend eligibility.
The record date of a dividend is the date set by a company to determine which shareholders are eligible to receive a declared dividend, based on who owns the stock on that date.
The three important dates for dividends are the Declaration Date, when the dividend is announced; the Ex-Dividend Date, determining shareholder eligibility for the dividend; and the Payment Date, when the dividend is actually distributed to eligible shareholders.
The main benefit of the ex-dividend date is it establishes a clear cut-off for determining dividend eligibility. Shareholders who own the stock before this date are entitled to the upcoming dividend payment.
No, if you buy a stock on its record date, you typically won’t receive the dividend. To be eligible, you must own the stock before the ex-dividend date, which precedes the record date.
We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, commodity and hence we bring you the important topics and areas that you should know:
