Dividend Dates: What You Need to Know

Dividend paying securities are an attractive option for many investors who are interested in receiving a regular
stream of income with the potential for long-term capital appreciation. When introducing a dividend paying
security into your portfolio it is important to remember and understand a few key dates: the declaration date,
the date of record, the ex-dividend date and the payment date.

Investors who seek to benefit from companies that return capital to Furthermore, a corporation may distribute dividends as cash,
shareholders may want to consider adding the potential benefits of stock or other assets such as property. These distributions
dividend-paying securities to their portfolios. From an investment decrease the total value of the company’s assets. This is reflected
perspective, the ability and willingness of a company to pay in the reduction of the stock’s share price by the dividend value
a dividend may serve as a sign that the company is in strong on what is known as the ex-dividend date, which is usually two
financial health and is an attractive opportunity for investment. days prior to the date of record.

Among Singapore corporations, common stock shareholders On the date of record the company reviews its books to
generally receive dividends semi-annually, which may vary determine who is listed as an official shareholder, and who will
depending on the company’s profits during that period. therefore receive the dividend payment. The date of record is set
Alternatively, companies may decide to issue an extra dividend, before the ex-dividend date and is used to determine when the
which generally occurs once a year. It is important to note that ex-dividend date will occur.
when dividends are distributed, preferred stock shareholders are
paid before common shareholders. Shareholders can expect to receive dividend payments as early
as one month from the date of record. The day dividends are paid
When a company makes the decision to offer a dividend they out to shareholders is known as the payment date and all date
are required to announce in advance how much the dividend of record shareholders, regardless of whether they still own the
payment will be, when the payment will be made and by which stock, will receive the dividend payment on this date.
date investors must own shares to be eligible to receive the Figure 1 defines the key dates for cash dividends and their
payment. This announcement is made on the declaration date. potential impact on investors.
Investors can use this information to calculate how much income
they will receive or whether they wish to purchase or sell shares.

Figure 1: KEY DIVIDEND DATES AND IMPLICATIONS FOR INVESTORS

Date DEFINITION IMPLICATIONS FOR INVESTORS

Declaration The date a company’s board of directors -- Investors find this information useful in determining if and when they plan to purchase or
Date announces that it intends to pay a dividend. sell a particular stock.
The company may also announce how -- Current shareholders or prospective investors can add this scheduled payment to previous
much the dividend payment will be and the payments paid over the past year to calculate the stock’s annual dividend.
intended date of record.
Ex-Dividend The date by which investors must own -- Investors who purchase shares before this date are considered shareholders of record and
Date the stock in order to become an owner of will receive the next dividend payment.
record and receive a dividend. This date is -- Investors who purchase shares on or after this date may pay less for the shares, but will not
usually two days before the date of record. receive the dividend payment.
-- Investors who sell shares before this date will not receive the dividend payment.
-- Investors who sell shares on or after this date will receive the dividend payment.
Date of The date on which a company looks at its -- Current shareholders will automatically qualify to receive the planned dividend as long as
Record records to determine who is listed as a they do not sell their shares before the ex-dividend date.
shareholder and therefore will be receiving -- Based on settlement practices, investors who wish to buy or sell shares before this date,
the dividend. An investor must be listed as a the Ex-Dividend Date, not the Date of Record, determines their eligibility to receive the
shareholder on the date of record in order to dividend.
receive the upcoming dividend payment.
Payment The date the dividend is actually paid out to -- Shareholders of record receive the dividend payment, even if they no longer own the
Date shareholders of record. shares on the payment date.
Source: SSgA.

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The following hypothetical example demonstrates the actions that buyers and sellers may wish to take around these dates based on
their particular investment objective.

Figure 2: DIVIDEND DATE TIMELINE

On June 1, 2012, XYZ Corporation declares that a cash dividend of 30 cents per share will be paid on July 9th to all shareholders
of record as of June 20th. The exchanges set the ex-dividend date for June 18th.

An investor who buys shares

on this date won’t receive a
dividend but may pay a lower
share price, because the value
An investor who of the stock has now dropped An investor who bought
buys shares on by the price of the dividend. For shares prior to the
or before this example, if XYZ’s share price ex-dividend date of June
date will receive a closed at $20 on June 17, it will 18 will receive the dividend
dividend. open at $19.70 on June 18. payment.

Declaration
EX-DIVIDEND Date Date OF RECORD PAYMENT DATE
Date

June 1 June 17 June 18 June 20 July 9

An investor who An investor who sells his shares An investor who sold
sells his shares on or after this date will receive shares on or after the ex-
on this date won’t a dividend. dividend date of June 18
receive a dividend. will receive the dividend
payment.
Source: SSgA.

Researching stock dividends and keeping track of payment schedules can be a time-consuming process. Many investors choose
exchange traded funds (ETFs) that invest in a variety of dividend-paying securities to make that process easier. These ETFs distribute a
portion of dividends directly to investors, usually on a monthly or quarterly basis, making them an attractive way to add the income and
capital appreciation potential of these stocks to a portfolio.

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