Ø if you are not in the company's record books on the date of record, you won't receive the dividend payment.
Dividends
Ø There are four key dates in a distribution a dividend distribution
2. The ex-dividend date, also called ex-date, is two days prior to the date of record.
Ø Any investor who owns the stock the day before the ex-date receives the forth There are four key dates in a distribution a dividend distribution
1. The declaration date, which is the date the board declares the distribution.
Dividends
Ø There are four key dates in a distribution a dividend distribution
Why All These Dates?
Ø Ex-dividend dates are used to make sure dividend checks go to the right people.
Dividends
Ø Cash dividends:
ØWe usually describe the cash dividends that a company pays in terms of dividend per share, which we calculate as:
Last day to buy
Earliest day to sell
Dividends
Ø Cash dividends: Ø Most dividends are in the form of cash. Ø Cash dividends are payments made directly to shareholders in proportion to the shares they own.
Ø An investor must be listed in the company’s record book on the date of record to ensure the right of a dividend payout.
4. The payment date, which is the day the distribution is made.
ØThis date is generally a week or more after the date of record so that the company has sufficient time to ensure that it accurately pays all those who are entitled.
Question1: when do you think is the latest date an investor needs to buy a company’s stock if he wants his purchase to be shown in the company’s book? Question2: When is the earliest date an invest needs to hold a company’s stock before he sells, in order to still receive the company’s dividend?
Ø In today's market, settlement of stocks is a T+3 process, which means that when you buy a stock, it takes three days from the transaction date (T) for the change to be entered into the company's record books .
Ø Any investor who buys the stock on the ex-date does not receive the dividend.
3. The date of record, which is the date that determines who receives the dividend.
Where are We?
Chapter 4 – 9
Where are We?
Chapter 4 – 9
Chapter 7 Dividend and Dividend Policies
Outline
Dividends
Ø A dividend is the cash, stock, or any type of property a corporation distributes to its shareholders. Ø dividends are not a legal obligation of the corporation—it is the board’s choice. Ø When the board of directors declares a dividend distribution, it specifies the amount of the distribution, the date on which the distribution is paid :