Date of payment

Written by Fmi.Online Friday January 6, 2023
The date of payment is the day that a company actually pays its dividends. Remember on the date of declaration, the board of directors only declares or decides to issue a dividend. The company doesn’t actually pay the dividend on that day. The dividend isn’t actually paid until the date of payment. Sounds pretty logical right? The time between the date a dividend is declared and actually paid could be as little as a week or as long as a few months.

Explanation :

After dividends are declared, the company has to record all of the shareholders that will get the dividend. This is called the date of record. Soon after the date of record, usually within a few days, the company issues the dividend payments to the shareholders in forms of checks, direct deposits, and wire transfers. The main reason for the delay in payment is for the company to organize its funds, record the current shareholders, and manage the logistics of sending out thousands or even millions of payments. A payment date, also known as the pay or payable date, is the day on which a declared stock dividend  is scheduled to be paid to eligible investors. This date can be up to a month after the ex-dividend date. Note that the stock price may fall on the payment date to reflect the dividend payment even if it has not been actually credited to investors at that point in time.

In a nutshell:

  • The payment date is the actual day when a company pays its eligible shareholders dividends. 
  • The payment date will often be a few weeks after the ex-dividend date has occurred.
  • Investors and analysts may watch the stock price on the payment date to see if the cash disbursal has a negative impact on the company's perceived financial stability.
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