(Tutorial) Ex-Date, Ex-Dividend Date, Record Date

In our previous article How are profits made in the stock market? we learned that two types of income from stocks are stock dividends and cash dividends.

Stock dividends are dividends given to shareholders in the form of additional stocks. The actual number of shares to be received can be computed by multiplying the number of shares held by the declared stock dividend percentage.

Cash dividends, obviously, are dividends in the form of cash. They are usually stated in peso or dollar amount per share, so the stockholder earns that amount multiplied by the number of shares owned.

Dates are very important in dividends because they determine if a stockholder is entitled to receive dividends or not. The most important dates are the dividend declaration date, ex-date, record date, and payment date.

Dividend Declaration Date

The declaration date is simply the date the company announces it is issuing dividends. During this announcement date, the company also usually mentions the ex-date, record date and payment date.

Ex-Date (or Ex-Dividend Date)

The ex-date or ex-dividend date is the first day when buying a stock does not entitle the buyer to the dividends. Prior to this date, the stock trades cum-dividend or “with dividend.” Starting from the ex-date, anyone who buys the stock will not receive the announced dividend. In the US, the ex-date is usually 2 days business before the record date because it takes 3 days (T+3) to complete a stock transaction.

Record Date

The date of record is when the company looks at its “records” or “books” to see who are the shareholders entitled to receive the dividend.

Payment Date

The payment date is when the company disburses the dividend to stockholders on record entitled to receive it.

Other references:

• Stock Trading 101: Guide and Tutorial to Stocks
• Stock Discussion of all PSE Listed Firms
• Discussion Forum on Stock Trading

Note: This is the seventh of several parts of Pinoy Money Talk’s primer on stock trading and investing, with a focus on investing in the Philippine stock market.

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• PRESCRIPTION DATE FOR CASH DIVIDEND PAYMENT PHILIPPINE RULING