Why isn't the record date for a dividend at the same time as the ex-dividend date instead of the next business day?
Why isn't the record date for a dividend at the same time as the ex-dividend date instead of the next business day?
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Franck Dernoncourt · External communityPost link
External question — Personal Finance Stack Exchange
Author: Franck Dernoncourt
Original post: https://money.stackexchange.com/questions/131840
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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I read on
https://finance.zacks.com/long-need-own-stock-dividend-payout-1761.html
(
mirror
):
Ex-Dividend Date: The ex-dividend date is the date that stock shares trade without the dividend. Shareholders who buy a stock on the ex-dividend date are not entitled to the next dividend payout. Since these shareholders miss out on one of the assets that make a stock valuable, the stock price drops by the amount of the quarterly dividend on the ex-dividend date. For example, a stock that pays a $1 annual dividend pays that dividend in four quarterly amounts of $0.25 each. If the stock's closing price the day before the ex-dividend date if $50 per share, that stock will be marked down to $49.75 at the next day's opening.
Record Date: The record date is the date that your name needs to be on the company's books as a registered shareholder. The record date is set one business day after the ex-dividend date. So, to be officially recorded as a shareholder entitled to the next quarter's dividend, you must buy a stock two business days before the record date.
Why isn't the record date for a dividend at the same time as the ex-dividend date instead of the next business day?
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nanoman · External communityPost link
External answer — Personal Finance Stack Exchange
Author: nanoman
Original post: https://money.stackexchange.com/a/131841
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
Say the record date is Wednesday.
If you buy the stock on Monday (trade date), it settles on Wednesday (T+2), so you are the owner of record on the record date, and you receive the dividend.
If you buy the stock on Tuesday, it settles on Thursday, so you are
not
the owner of record on the record date, and you do
not
receive the dividend.
By definition, the ex-dividend date is the first day when buying the stock will not entitle you to the dividend. So the ex-dividend date is Tuesday, one day before the record date.
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Quoted from Forex.com.bd-Editorial External question — Personal Finance Stack Exchange Author: Franck Dernoncourt Source score (net votes, not local likes): 2 Original post: https://money.stackexchange.com/questions/131840 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I read on https://finance.zacks.com/long-need-own-stock-dividend-payout-1761.html ( mirror ): Ex-Dividend Date: The ex-dividend date is the date that stock shares trade without the dividend. Shareholders who buy a stock on the ex-dividend date are not entitled to the next dividend payout. Since these shareholders miss out on one of the assets that make a stock valuable, the stock price drops by the amount of the quarterly dividend on the ex-dividend date. For example, a stock that pays a $1 annual dividend pays that dividend in four quarterly amounts of $0.25 each. If the stock's closing price the day before the ex-dividend date if $50 per share, that stock will be marked down to $49.75 at the next day's opening. Record Date: The record date is the date that your name needs to be on the company's books as a registered shareholder. The record date is set one business day after the ex-dividend date. So, to be officially recorded as a shareholder entitled to the next quarter's dividend, you must buy a stock two business days before the record date. Why isn't the record date for a dividend at the same time as the ex-dividend date instead of the next business day?
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