What is the Dividend Declaration Date?

A dividend declaration date is the date on which a company announces an upcoming dividend payment, usually by issuing a press release a few weeks before the dividend is actually paid.

How Does the Dividend Declaration Date Work?

Let's assume you own 100 shares of Company XYZ. At the end of the quarter (say, March 30), Company XYZ calculates its financial performance. The board of directors thenreviews this information, including Company XYZ’s profits, and declares, via an April 30 press release, a $0.10 dividend per share for the quarter, payable on May 15. In this case, the dividend declaration date is April 30.

Why Does the Dividend Declaration Date Matter?

The dividend declaration date is one of several important dates to note when concerning dividend payments. The others include:

* Record Date: This is the date on which a company reviews its books to determine its 'shareholders of record.' Investors listed as shareholders of record on this date will receive the firm's dividend payment.

* Ex-Dividend Date: After the Record Date has been determined, then the ex-dividend date is assigned. The ex-dividend date for stocks is typically two business days prior to the record date. If an investor buys a stock before the ex-dividend date, then he or she will receive the dividend payment. If an investor purchases the stock on or after the ex-dividend date, then he or she is not entitled to receive the dividend.