Payment date

The payment date (also called the payable date) is the day a company distributes a declared dividend to shareholders who were eligible as of the record date. The cash is sent through the company's paying agent and the depository to brokers, which credit investors' accounts.

How it works

The payment date is set by the board at the declaration date. The gap between record date and payment date varies by company, often from a few days to several weeks, to allow the transfer agent to reconcile the shareholder list.

• Cash dividends arrive in brokerage accounts on the payment date, sometimes appearing a day later depending on the broker.
• DRIP participants have the cash used to buy additional shares on or around the payment date.
• Large distributions: when a dividend equals roughly 25% or more of the share price, the ex-dividend date is set after the payment date, the reverse of the normal order.

Owning the stock on the payment date is not required. What matters is buying before the ex-dividend date.

Why it matters for traders

The payment date usually has little effect on the stock price; the price adjustment for the dividend happens on the ex-date. It matters for cash planning, for tracking when reinvested shares arrive, and for the large-distribution exception, where the ex-date timing changes and sellers before the ex-date must deliver the dividend to buyers through due bills. For companies under financial stress, a declared dividend actually being paid on schedule can also be a small confirmation that cash is available.

Example

Cobalt Ridge Mining (ticker CBRM) declares a $0.25 quarterly dividend with a record date of June 12 and a payment date of June 30. An investor who owned 2,000 shares before the June 12 ex-date and sold them on June 15 still receives $500 on June 30.

FAQ

Do I need to own the stock on the payment date?

No. Eligibility is set by buying before the ex-dividend date. You can sell before the payment date and still be paid.

Why is there a delay between the record date and payment date?

The company and its transfer agent need time to finalize the list of eligible holders and arrange the funds.