The declaration date is when a company’s board of directors announces their intention to pay a dividend to shareholders, with a date of record and payment also indicated. Dividends are usually paid quarterly and can be in cash or stock.
A declaration date (or announcement date) is the actual date a company’s board of directors announces its intention for a dividend payment. This is the day the company will officially owe the dividend to the shareholders.
A dividend is a distribution of a portion of the company’s profits. Common and preferred shareholders are paid. Most companies that pay dividends pay them quarterly. This would mean that if your company had a $1 dollar (USD) dividend, you would receive $.25 (USD) per share every three months.
A declaration date is announced for each stock dividend payment. Most dividends are paid in cash or stock. In addition to regular dividends, one-time special dividends occur as a result of litigation, the sale or liquidation of part of the business, or spin-off businesses.
The accounting will record the binding responsibility for the payment of dividends from the declaration date. This number will include the total amount of the dividend payment, the number of eligible shareholders and the payment date of the issuance.
The declaration date is also when the board of directors will indicate a “date of record” and a “date of payment”. The record date is the date a shareholder must own the shares to qualify to receive dividend payments. In other words, if you bought the shares after the record date (or ex-dividend date), you would not be eligible for that particular dividend payment.
The payment date is the actual payment date for that particular dividend. It is usually a week or more after the registration date. This date can affect the price of the shares and many investors will take this date into account at the time of the market.
Once the dividend payment is authorized, it is binding on the company. The third Friday of the forecast month is the declaration date for all US stock options. If that date falls on a holiday, the declaration date will be the third Thursday of that month.
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