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What is a Dividend?

What is a Dividend?

A dividend is the distribution of reward from a portion of company's earnings and is paid to a class of its shareholders. Dividends are decided and managed by the company’s board of directors, though they must be approved by the shareholders through their voting rights. Dividends can be issued as cash payments, as shares of stock, or other property, though cash dividends are the most common. Along with companies, various mutual funds and exchange traded funds (ETF) also pay dividends.

 

What Is Ex-Dividend Date?

Ex-dividend describes a stock that is trading without the value of the next dividend payment. The ex-dividend date or "ex-date" is the day the stock starts trading without the value of its next dividend payment. A buyer who purchases a stock on or after its ex-dividend date is not entitled to the declared dividend – it is owned by whoever owned the stock the day before the ex-dividend date.

What Is the Record Date?

The record date, or date of record, is the cut-off date established by a company in order to determine which shareholders are eligible to receive a dividend or distribution. The determination of a record date is required to ascertain who exactly a company's shareholders are as of that date, since shareholders of an actively traded stock are continually changing. The shareholders of record as of the record date will be entitled to receive the dividend or distribution, declared by the company.

What Is Dividend Payable Date?

The dividend payable date is the date on which a company pays a dividend to its shareholders of record.