What is the record date?

Definition and Example of Record Date

In trading, the record date is the maximum date set by the company to determine which shares are eligible to receive upcoming dividends. Learn why it is important to know the company’s record date, and why you might be surprised when expecting a dividend distribution.

How Record Date Works

The record date is closely related to the ex-dividend date. When the company’s management announces that it will issue a dividend, it sets the record date that will determine the identity of the shareholders entitled to the dividends. The company also sets the ex-dividend date at this time, as well as the payment date for the distributions.

What This Means for Investors

Payouts from dividend-paying stocks are significant sources of income for many investors. Therefore, there are important facts to keep in mind.

Dividends received in a taxable account are counted as income and must be reported on the tax return, even if they are reinvested in additional shares.

Dividends can cause a decrease in the company’s stock price, which is why investors might be wiser to wait for the dividend payout before purchasing shares.

Shareholders of dividend-paying stocks may want to consider the record date for the upcoming dividend payout when making any decisions about selling shares or buying more of them.

These are some key points to understand what the record date is, how it works, and what it means for investors.

Source: https://www.thebalancemoney.com/what-is-record-date-5220863