Glossary term
Record Date
A record date is the date a company uses to determine which shareholders are entitled to receive a dividend, proxy materials, or other shareholder information.
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What Is a Record Date?
A record date is the date a company uses to determine which shareholders are entitled to receive a dividend, proxy materials, financial reports, or other shareholder information. To be counted, an investor generally must be listed as a shareholder of record by that date.
Record dates are especially important for dividends, but they also matter for shareholder meetings and voting materials.
Key Takeaways
- The record date identifies which shareholders are on the company's books for a specific corporate action.
- Dividend eligibility also depends on the ex-dividend date and settlement rules.
- Buying a stock on or after the ex-dividend date usually means the buyer will not receive the upcoming dividend.
- Record dates can also determine who receives proxy materials and company reports.
- Investors should not look at the record date alone when evaluating dividend eligibility.
How a Record Date Works
When a company declares a dividend, it sets a record date. Shareholders recorded on the company's books as of that date are entitled to the dividend. However, because stock trades take time to settle, exchanges use an ex-dividend date to determine whether a buyer or seller receives the upcoming dividend.
That means the ex-dividend date is often the more practical date for investors deciding whether a stock purchase will qualify for the next dividend.
Record Date Versus Ex-Dividend Date
Date | What it does |
|---|---|
Record date | Determines which shareholders are on the company's books |
Ex-dividend date | Determines whether a buyer receives the upcoming dividend |
Payment date | The date the dividend is paid |
Why Record Dates Matter
Record dates help companies know who should receive shareholder communications and payments. For investors, they help explain why simply owning a stock on the payment date is not enough to receive a dividend.
They also matter for proxy voting. A company may set a record date to determine which shareholders can vote at an upcoming meeting.
The Bottom Line
A record date is the company's cutoff date for identifying shareholders for a dividend, vote, or communication. For dividend eligibility, investors should review both the record date and the ex-dividend date.