Whenever any company declares a dividend, there are 4 dates linked to them.
- Dividend Declaration Date
- Ex-Dividend Date
- Record Date
- Final Dividend Date
The first date is called dividend declaration date, companies board of directors announces the dividend per share and its amount.
Apart from that there are two more dates, one is record date and other is called as payment date. Companies announces these dates simultaneously. Record date is the date on which I should be shareholder in company’s records, so that dividend can be credited to my account.
In case of record date as 17th April, I need to be shareholder as on that date to get the dividend. But the challenge is when I buy shares from market it will be take T+2 days to credit to my demat, meaning which I will have to wait for 2 trading days to receive shares in my demat account .
Now let’s understand ex-dividend date. The ex-dividend date is the date set by companies two days prior to the record date. If I want to receive the dividend, I need to purchase the shares before ex-dividend date and be on shareholders list on that date.
The fourth date is dividend payment date and on this date, the dividend is paid to the shareholders and whenever a company declares a dividend, they tell us if its interim or final. The interim dividend is the one which is announced during the financial year. This dividend can be taken back with the consent of the shareholders and final dividend is the one which is given out after the closing of the financial year and is announced in the company’s annual general meeting. By this time, the year-end financials of the company are prepared and it cannot be taken back