An important aspect in understanding dividend paying stocks is the knowledge of important dividend dates. A dividend is typically a form of cash distribution paid to investors out of the company’s earnings.
What are the key dividend dates?
1. Declaration Date: Also known as the announcement date, is the date where the company’s board of directors approves and announces payment of a dividend date.
For example, May 5, 2020 (Declaration date) Enbridge Inc. (ENB) declared a quarterly dividend of $ 0.81 per common share, payable on June 1, 2020 (Payment Date) as of record on May 15, 2020 (Record date).
2. Ex- Dividend Date : Is the first day that a stock trades without a dividend. Existing shareholders and buying the stock prior to this date will be entitled to a dividend, whereas holders who will sell their stock will lose their right to the dividend.
For example, Enbridge Inc. (ENB) ex-dividend date is May 14, 2020 which is one day before the record date.
Note: You must buy or own the stock before the ex-dividend date in order to receive the next scheduled dividend.
3. Record Date: Is the date where the investors are registered in the company’s books in order to be entitled to receive a dividend.
This is the date that can easily get mixed up and confused by other investors. You need to remember that the ex-dividend date is before the record date as there is a settlement period for a stock trade to settle which is about two days.
4. Payment Date: Finally the most important date or I would usually say “the salary day” for dividend investors. It is the date on which the dividends are paid to shareholders.
Traditionally it is mailed to shareholders or credited electronically to brokerage accounts. Dividend payments will either be withdrawn from your brokerage account to your checking account or as available funds for reinvestment.
In this example, Enbridge Inc (ENB) dividend payable date is June 1, 2020 and shareholders are entitled to receive $ 0.81 per share.
My Final Thoughts
As a dividend investor remembering these dates are vital, whether you are already retired and dividend comes as a source of income, hence payment dates are important or those investors who are still building their passive source of income by reinvesting their dividends.