Record Date

What the record date is

The record date (or date of record) is the cutoff a company sets to determine which shareholders are officially on the books and therefore eligible to receive a declared dividend or distribution.

Companies use the record date to lock in the roster of shareholders who will receive a payout. Because ownership changes continuously, the record date — together with the ex-dividend date and the payable date — establishes who gets the money.

How it works with settlement and the ex-dividend date

Under the current T+1 settlement system (trade date plus one business day), a trade settles one business day after it is executed.
To be a shareholder of record on the record date you must buy the stock early enough that the trade is settled by that date. Practically, that means you must buy at least one business day before the record date.
The ex-dividend date is the first day on which new buyers are not entitled to the upcoming dividend. It is typically one business day before the record date. If the record date falls on a non-business day, the ex-dividend date is generally the last business day before the record date.
Special rule: if a cash distribution is 25% or more of the stock’s value (rare), FINRA sets the ex-dividend date as the first business day after the payable date.

Simple example

Company declares a $1 dividend payable May 1 to shareholders of record as of April 10.
Record date: April 10.
Ex-dividend date: usually April 9 (one business day before April 10), or the last business day before April 10 if April 10 is not a business day.
To receive the dividend: buy the shares no later than April 8 if settlement requires one business day (i.e., buy at least one business day before the ex-dividend date in some scenarios). In practice with T+1, buying on April 9 would settle on April 10, making you a shareholder of record on April 10.

Common questions

Will I get a dividend if I buy on the record date?
No. Buying on the record date is too late; you must be the shareholder of record on that date, which requires earlier purchase and settlement.
What if I buy on or after the ex-dividend date?
You will not receive the upcoming dividend. The seller (who was the shareholder of record) receives it.
What if I sell on the record date?
You still receive the dividend. Because the ex-dividend date has already passed, the seller (you) remains the shareholder of record for dividend entitlement.

Key takeaways

The record date determines who is eligible to receive a declared dividend.
The ex-dividend date is the cutoff for purchasers: buy on or after the ex-dividend date and you will not receive the dividend.
Under T+1 settlement, plan to purchase at least one business day before the record date (or consult the announced ex-dividend date) to ensure you’re on the books.
Check company announcements for exact record, ex-dividend, and payable dates and for any special rules (for example, large cash distributions).