What is the Dividend Payable Date?
The dividend payable date is the date on which a company pays a dividend to its shareholders of record.
How Does the Dividend Payable 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 then reviews 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 payable date is May 15.
Why Does the Dividend Payable Date Matter?
The dividend payable date is one of several important dates to note when a company declares a dividend. The others include:
Declaration Date: 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.
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.
These dates are important because they cause short-term price swings. For example, dividend declarations generally attract buyers and drive prices up. When a stock goes ex-dividend its price usually then falls, reflecting the fact that the dividend payment is in the past.