If I buy or sell shares on Ex-Date of Dividend announcement, Do I receive the dividend? What is the record date?

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Here’s the process flow of how Dividends are paid out:

Dividend Payment process

Dividend Declaration Date: This is the day the Board of Directors authorize and announce the dividends to its shareholders. Once the dividend is authorized it becomes the company’s legal liability to pay such dividends.

Ex-Date or Ex-Dividend Date: As the name suggests, Ex-Dividend date is the date on which the stock trades without the dividend included in it. Normally the price of the stock will drop to the extent of the dividend declared on the ex-dividend date. You will have to ensure that you buy the stock before the Ex-Dividend date to be eligible for the dividends. 1387554941_emblem-important You will NOT get the dividend in case you are buying the stock ON the ex-dividend date.

Record Date: Normally there’s a certain amount of time involved between when the shareholder’s buy stock and when their names are registered in the company’s records. Dividends are paid to shareholder’s whose names appear in the company’s records as on the Record date.

Record date is normally 3-4 days after the ex-dividend date. If you buy the stock by Ex-Date, you can expect your name to be in the Company’s record by the Record Date.

Dividend Payment Date: This is the day on which the company distributes dividends to its shareholders. This may be within 30-45 days of having declared the dividend. Companies pay out dividends by either sending you a check or mostly by making an electronic transfer into your bank account. Make sure you have updated your bank details correctly with the DP to ensure timely credit of Dividends.

Let’s look at a practical example to get better understanding:

Strides Arcolab announced a Special Dividend of Rs.500 on the 10th of December 2013 and the Ex-Date was 19th December 2013. This meant that anyone buying the share until the Ex-Date (until 18th of December) would be eligible for the dividends.

The closing price of Strides Arcolab on 18th December (One day before Ex-Dividend Date) was Rs.880. On the 19th (Ex-Dividend Date) it opened at a price of Rs.352 which was the price not including the dividend declared.

In the above example,

Dividend Declaration Date was 10/12/2013

Ex-Date was 19/12/2013, if you would have bought the stock before 19th you would have been eligible for the special dividend declared.

From the time the Dividend was declared till the Ex-date the stock was trading with its dividend value included in it.  In such period the stock is said to be trading Cum Dividend.

Important:

  • Dividend is always declared as a percentage on the Face Value of the share. So if the company declares a dividend of 500% it means 500% of the Face Value of the share and not on the current market price of the share. If the face value of the share is Rs.10 then you will be eligible for a dividend of Rs. 50 (10*500/100)
  • Income Tax Treatment: Companies paying out the dividend are required to pay Dividend Distribution Tax (DDT)/Corporate Dividend Tax (CDT) of 15% plus surcharge and education cess. Dividend received in the hands of the shareholders/investors are exempt from tax provided the company paying such dividends has already paid the DDT/CDT.

Hopefully this should be able to help you out with your queries on dividends. Do feel free to post any queries if you have.

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Hi,

I’ve a query about the ex-date & Record date on this article.

Ex-Date or Ex-Dividend Date: As the name suggests, Ex-Dividend date is the date on which the stock trades without the dividend included in it. Normally the price of the stock will drop to the extent of the dividend declared on the ex-dividend date. You will have to ensure that you buy the stock before the Ex-Dividend date to be eligible for the dividends. Important: You will NOT get the dividend in case you are buying the stock ON the ex-dividend date.

Record Date: Normally there’s a certain amount of time involved between when the shareholder’s buy stock and when their names are registered in the company’s records. Dividends are paid to shareholder’s whose names appear in the company’s records as on the Record date.

Record date is normally 3-4 days after the ex-dividend date. If you buy the stock by Ex-Date, you can expect your name to be in the Company’s record by the Record Date.

Query:

The above both of the statements are confuse to me.
 

One is “You will NOT get the dividend in case you are buying the stock ON the ex-dividend date.” in ex-dividend date.

And another one is “If you buy the stock by Ex-Date, you can expect your name to be in the Company’s record by the Record Date”.

My doubt is, if I buy the stock on ex-dividend date. Am I eligible for dividend or not?

Then, why the record date is come on this term? And some company not defines the record date? Why?
 

I see the money control link some not shown the record date: http://www.moneycontrol.com/stocks/marketinfo/dividends_declared/

Good one!
My friend wondered after getting divident only after holding shares of a company for 7 days, he should have bought it before ex-divident date.

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Today is ex dividend date of Larsen and tourbo share.
I have bought delivery of it 1 week before.
Some bought on 10_August_2018.
I m eligible for dividend?

@Rajiv1 : larsen and turbo share purchased maximum till August 13 will qualify for dividend so your purchase of August 10 will surely be.

@Rajiv1 you will get electronic credit of this dividend of rs 16 per share on August 23.

I am holding XYX shares, and if I sell on Ex date or just 1 day before X date, Am i eligible to received dividend?

Recently I bought 16 shares of Pfizer on 5th May CNC and sold them on 6th May CNC (the Ex-dividend date). But I have not received the dividend yet (and apparently the payment date was 19th May). Are there cases where I buy a cum dividend share before the ex-dividend and still my name would not come up in the company’s record of shareholders on record date (in this case the record date was 8th May) and hence would not be eligible for dividend? If yes, can you please explain those in detail. If no, what can I do claim my dividend? Regards.

IMO, you wouldn’t be entitled to receive dividend since you cannot sell shares at T+1 after buying. even though broker gives facility to sell you at T+1 since it allowed you cz you have sufficient bal in trading A/c, and if broker gets default to honour the shares to the buyer, he will billed you… So in this case , you are not eligible.

Read my answer. I already received the dividend.