What's the Difference Between a Dividend Record Date and Payable Date?

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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Dividend record and payable dates are important to monitor since they relate to when dividends are paid out to investors from an investment. The record date of an investment dividend refers to the date that the corporation's board of directors sets as the deadline for investors to be counted on the company's books.

The payable date is also called the dividend payment date. However, there are other dates that are important to monitor to ensure investors get paid their dividends.

Key Takeaways

• When a company decides to pay dividends to its shareholders, there are a few key dates investors should keep in mind.
• On the declaration date, the Board of Directors announces the dividend, the size of the dividend, the record date, and the payment date.
• The record date is the day by which you must be on the company’s books as a shareholder to receive the declared dividend.
• Own the stock before the ex-dividend date and you get the dividend; buy it on or after the ex-date, and you don't - the seller of the stock gets it.
• The payable, or payment date is when the company pays the declared dividend only to shareholders who own the stock before the ex-date.

Record Date

The record date is the date that the company reviews its records to see which shareholders qualified for the next dividend payment. However, investors who buy shares on the record date will be too late to be eligible for the next dividend. The record date is merely a date for the companies that pay dividends to get their records in order.

Ex-Dividend Date

The ex-dividend date is the date for new shareholders that disqualifies them for earning a dividend in the next period. In other words, investors who buy shares on or after the ex-dividend date will not earn a dividend in the next payment. Investors must buy before the ex-dividend date to qualify for the next dividend. The record date, on the other hand, is typically one-to-two days after the ex-dividend date.

Payable Date

The payable date refers to the date that any declared stock dividends are due to be paid out to shareholders of record as of the ex-date. Investors who purchased their stock before the ex-dividend date are eligible to receive dividends on the payable date. It's important to note that if the stock is sold on or after the ex-dividend date, the investor will still get paid the next scheduled dividend.

Although it's important to be aware of all the deadlines pertaining to a dividend dispersal, knowing the ex-dividend date is crucial to understanding whether or not investors are entitled to receive a dividend payout on the payable date.

Example of Record and Payable Dates

Below is the dividend information for 3M Company (MMM), which is a large company involved in the industrial, healthcare, and consumer segments. A perennial dividend payer, 3M has an over 50-year track record of paying dividends. Below is a table from their investor relations page outlining the important dividend dates for 2019.

• We can see that the ex-dividend date is on Aug. 15–one day before the record date of Aug. 16.
• The payable date falls on Sept. 12, 2019.
• In other words, all investors who bought or owned shares before the ex-dividend date of Aug. 15 will get paid a dividend on Sept. 12.