Dividend Chronology Question

I have some confusion between Ex-dividend date and Holder of record date, here are these definitions as I understand in simple terms.

Ex-dividend date- If you hold this stock before this date or sell the stock on this date you get the dividend. If you buy the stock on or after this date you do not get the dividend.

Holder or record date- If the company lists you as the stock holder on this date you receive the dividend. Typically 2 business days after Ex-dividend date and this is determined by the company.

Does this mean these definitions conflict? It states in the ex-dividend date if you hold the stock after this day you do not get the dividend, but if you hold the stock on the holder of record date according to the company, you get this dividend (which is usually 2 days after Ex dividend date).

Can someone help me understand this?


Chronologically: Dividend declaration/announcement date --> ex-dividend date --> holder of record date --> payment date.

Dividend declaration: announcement of dividend amount and date of payment to shareholders.

Ex-dividend date: first day the shares trade without the dividend (think of the “ex” as “without” the dividend). To receive the dividend you’d need to own/purchase the shares the day before the ex-dividend date. The reason for this is the settlement period for stocks is usually 3 days, so a purchase on or after the ex-dividend date means your purchase will not settle in time for your ownership to appear on the company’s record of current shareholders.

Holder of record date: assuming your purchase was before the dividend date and settled on time you’d show up as a holder of the company’s shares on this date and qualify for the dividend to be paid on the payment date.

Payment date: $$

Hope that helped!

It helped! Now I know you must own the stock the day before the Ex dividend date. Thank you! So if you sell the stock on the ex dividend date you still get the dividend?

Yes, you would!


In additions to this, I would like to add that the Payment Date can be at any day, including both weekends and holidays. I have gotten that question twice during the mock exams and unfortunately, I missed a very simple point :slightly_smiling_face:.

Thank you! Noted :slightly_smiling_face: