Declaration date:

This is the date on which a company`s Board of Directors actually sets the amount of the next quarterly dividend. Typically it is many weeks in advance of the actual payout date. The amount is set and announced to the shareholders. The declaration is usually worded something like this:

On June 2, 1998 the company will pay a dividend of X cents to sharesholders of record as of May 15.

Record Date:

In the above example May 15 is the Record Date. That`s the day that a person has to actually own shares in the company in order to receive the declared dividend. Essentially a big list of shareholders is drawn up on that date and checks are sent to those owners. Now, you will immediately be wondering ``what about people who trade on that day?`` Good question. Keep reading.

Ex-dividend date:

In today`s electronic reality, the record date isn`t what it used to be. (Imagine rows of clerks compiling lists of shareholders by hand.) Transactions occur so fast that we are actually down to a Record Instant.

The stock exchanges have stepped in to make the process work efficiently by declaring an ex-dividend date. On that date, actually at the instant the market opens, the stock is declared ex-dividend, ``ex`` meaning ``without|`` dividend. Two things happen. First an x goes next to the stock symbol to let anyone buying it know that they won`t be receiving the dividend. Second, all pending orders to buy or sell are reduced by the amount of the dividend unless the buyer or seller has specifed other wise (by using a Do Not Reduce order). The price is reduced because the value of the company has just been directly reduced by the amount of the dividend.

The x-dividend date is usually 3 days in advance of the record date to give all orders time to settle by the record date.

Now, you are wondering about stock held in street name, right? These days the lists of Shareholders of Record read like the Manhattan Yellow pages under Stock Brokers. No problem. The brokers handle all of the book-keeping. If your trade was executed before the stock ``went x-dividend,`` the brokers will pass the dividend along to you when they get it.

Payable Date:

Checks go out.

R/ Raillery