Dividend Dates Explained

For Australian traders and investors, only two dates are important: the ex date (or the ex dividend date) and the payable date (or payment date). For companies, the dates important to them are the closing date (or the record date) and the payable date.

Company Declares a Dividend

When an Australian public company declares a dividend, it also announces as books closing date (or record date). All the shareholders of the company who are listed on the shares register will be entitled to receive the dividend.

To be on the share register at the record date, stock investors will have to buy the shares three business days earlier. Why? Because the Australian stock market (ASX) operates on the T+3 settlement system (the transaction plus 3 days). When you buy an Australian share, you are the economic owner of the stock, exposed to the gains and losses of the stock's price. However, the actual day the trade is settled, where money and stock changes hands occurs three business days later.

The Ex Dividend Date

The ex dividend date (or the ex date) is a date which considers T+3 and the record date. The ASX calculates this date for investors and it also considers public holidays and weekends. The exdiv is an important date for investors as you must buy the stock before this date to be entitled to the dividend. Buy the company's shares on or after this date, and you’ve missed the current dividend.

The share price falls by the value of the dividend on the exdividend date. You will be paid the difference as a dividend payment. Of course, the extent of the fall may depend on current economic and company circumstances – the stock price may fall more than the dividend price or fall just a little.

The Payable Date

The payable date is when the company sends out payment of the dividend via cheques or a direct deposit to the entitled shareholders. For investors who have chosen to be a part of a Dividend Reinvestment Plan (DRP), you will receive shares in lieu of cash.