Ex date, record date, books closing date, payable date: dividends seem to have almost as many dates as you'd find at Sydney's Slip Inn on a Friday night.
Luckily for us, there are only two dates that really count for investors: the ex date and the payable date (or payment date as it's sometimes known). If these were the only dividend dates you knew about, you could still live a happy and prosperous life.
From a company's point of view, the only dates that really matter are the books closing date (also known as the record date) and the payable date. But we're getting ahead of ourselves.
T+3—The Settlement Day
When a company declares a dividend, in addition to the amount per share, it also declares a books closing date (which, as we've noted, can also be called the record date). This means that all shareholders who are on the company's share register at that date will receive the dividend.
But in order to be on the share register at that date, investors need to have bought the shares at least three business days earlier. It's all to do with T+3 settlement. Now, that's not a reference to an Arnold Schwarzenegger film or a controversial telecoms privatisation; it's simply the procedure for settling trades on the ASX. When investors buy shares through their broker, the moment the trade is executed the investor becomes the economic owner of the stock, and bears the gains or losses from movements in its price.
But the actual day the trade is settled—when money is exchanged and the stock is transferred from seller to buyer—doesn't occur until three business days after the trade is executed.
Visit The Intelligent Investor for the rest of this article on dividend dates to find out more on the ex dividend dates.