Dividend Chronology

CFA Level I
#1

I’m having trouble understanding the Holder of Record Date, here are the definitions per Kaplan:

Declaration date. The date the board of directors approves payment of a dividend, specifying the per-share dividend amount, the date shareholders must own the stock to receive the dividend (record date), and the date the dividend payment will be made (payment date).

Ex-dividend date. The first day on which a share purchaser will not receive the next dividend. The ex-dividend date is one or two business days before the holder-of-record date, depending on the settlement period for stock purchases. If you buy the share on or after the ex-dividend date, you will not receive the dividend.

Holder-of-record date (record date). The date on which all owners of shares will receive the dividend payment on their shares.

Payment date. The date dividend checks are mailed to, or payment is made electronically to, holders of record.

If you purchase the stock on or after the ex-dividend, you do not receive the dividend. If the holder of record date after and the owners at that time receive dividend payment doesn’t that contradict the ex dividend date? Also, how is holder of record different from payment?

Just cant understand the differences between the two.

#2

Yes.

Not sure what you mean with this. The point is that whoever is in the books on the record date receives the dividend. The ExDiv date is some days before this date, because it takes usually 1-3 days (this is the time between the ExDiv date and record date) for equity transactions to clear on exchanges. Therefore to ensure you actually receive the dividend, you must have a buy order execute before the ExDiv date.

#3

That clears it up for me, thanks!