What is a Record Date?

The record date is the date used to determine the holders of a security who are entitled to receive a dividend or distribution.

How Does a Record Date Work?

When a company is preparing to distribute dividends to shareholders, it uses a list of shareholders who are holding the security on a particular date. That date is referred to as the 'record date.'

For example, a firm may declare a dividend on June 1, payable on July 1 to holders of record on June 15. The record date is June 15.

Why Does a Record Date Matter?

The record date varies from among types of securities. For example, once a trade is executed, an investor becomes the owner of record on settlement, which takes five business days for securities and one day for mutual funds. Therefore, stocks trade without their dividend (i.e. ex-dividend) four days before the record date since the seller will still be the owner of record on the record date and is entitled to the dividend.