Dividend Dates. Dividend Record Dates and Dividend Distribution Dates. Why are they so important?
Dividend Record Dates
The record date is the date the books of the company are closed. Everyone who is a shareholder on the books of the corporation at the end of that day will receive a dividend.
Subsequently, when the record date has passed, the stock will trade ex-dividend (without the dividend). The price of the stock will thus be reduced by the amount of the dividend that has been declared, since the new investor will not receive a dividend.
Dividend Distribution Dates
The distribution date is the date when the dividend will actually be paid to shareholders; this date can vary from a few days to a few weeks after the record date.
Common stock vs Preferred stock
Are you holding common stocks or preferred stocks? This could also affect your dividend payout dates.
Common stock refers to the most widely held form of stock. Most of the stocks that are actively traded in the stock market are common stocks. However, after the initial issue, common stocks have no fixed dollar value, and will rise and fall with the company’s current state of affairs. Dividend payouts are variable.
Stockholders who hold preferred stocks are at a privileged position, as dividend payouts are fixed, and they would then be entitled to receive dividend payouts before any other shareholder. Those who hold preferred stocks would also be entitled to the company’s preferred assets should the company dissolve.