The dividend distribution is a corporate action that describes the event of profits distribution to shareholders. As we previously mentioned in our posts, shareholders’ satisfaction comes above all. Therefore, one of the best tactics to implement is Direct Cash distribution. Sounds like helicopter money right ?!

Approval of dividend

The dividend event needs to be first approved by the General Meeting of shareholders. Consequently, the board of directors sets the dates as well as the amount.


First of all, the dividend event declaration gives the company a good reputation in the market, as being a productive company, that can generate revenues, and has the ability to even, share those revenues with shareholders.

Consequently, the event can have a positive impact, on the share price, in the stock exchange, which makes the share more attractive to other investors, and the list goes on…

Source of the funds to be distributed

For a pure dividend distribution, in contrast to the “Return of Capital” event. The dividend has to come from pure profits. Current profits or recurrent profits doesn’t matter. It all ends up in the category of dividend distribution.


  • Company: Euronext
  • ISIN: NL0006294274
  • Market: Euronext

In line with the current dividend distribution policy of Euronext, it is proposed to distribute 50% of 2017 reported net profit. As a consequence, subject to shareholder approval at the company’s Annual General Meeting of Shareholders to be held on 15 May 2018, the annual gross dividend on the 2017 results to be paid in 2018 amounts to €1.73 per share. This represents an increase by approximately +22% compared to the €1.42 dividend per share paid in 2017.

dividend euronext
Same source

You can clearly see, in our example above, that company is willing to pay 50% of its profits as a dividend. The amount to be paid is 1.73 EUR per share. In contrast to the previous year, the dividend has increased by 22%.

Dividend key dates

Here, i will introduce a very important concept that you need to understand. This concept is being used, in almost every corporate action.

Who is entitled for the dividend ?

If you think about it, the shares are traded continuously in the stock exchange, during the trading hours (Monday to Friday). So how do we decide which person is going to, receive the dividend payment ?

– Announcement date

The date in which the dividend distribution was announced for the first time. In our example above it was 2018-03-14.

dividend euronext

In this date, the price of the share increases by the dividend amount automatically. This is common market practice. As a result we say: “The share is trading Dividend right attached”

Anyone who buys the share at that date is consequently buying the dividend right too.

dividend announcement

– Ex-date

The Ex-date is the date in which the dividend right gets detached from the share. As a result if you buy the share at that date, you will not be entitled for the dividend distribution.

Dividend dates

Keep in mind that, the ex-date is the most important date, that’s being used, to define dividend ownership. Now let’s explain the next one which is the record-date

– Record-date

Record-date is defined as the date in which, the company or what we call the registrar (an agency taking care of financially related matters for public companies) is literally writing down and defining the dividend ownership.

Unlike the ex-date, this date is not decided by the company. The record-date definition comes from what we call “Settlement-Cycle” or “Settlement-Period” of the Stock Exchange in which the company is listed, or in which the share has been purchased (US market, European market, Asian Market….).

– – Settlement Cycle

The settlement cycle is the time range necessary for ownership transfer, in a stock exchange. Meaning, if you buy a stock today, the how long does it take for you to be considered owner of that stock.

In a regulated market, the ownership needs to be registered by the stock exchange as well as the Depository clearing. Consequently, ownership transfer is a process that takes some time to be fulfilled.

Let’s take an example:

Market: Euronext Paris

If you google “euronext setlement cycle”. You will find the following document:

euronext setlement-cycle
Source: here

So you can read that the Settlement-Cycle has changed in 2014 from T+3 to T+2. Consequently, the ownership gets transferred in the 2nd day after the “Transaction” date (T). So “T” means transaction.

Hence, f you bought a share on 2019-06-18, you would be officially holder of that share on 2019-06-20. On that date you can sell the share if you want.


Now let’s go back to the record-date and apply what we have learned from the settlement-cycle.

After the detachment of the dividend right in the Ex-date, the company needs to set the final list of the shareholders who are entitled. So in a Settlement-Cycle of T+2, the Record date would come 1 day after the Ex-date. Checkout this illustration for the sake of your deep understanding 🙂

dividend ex-date

If you buy on 2019-06-18, the last day with dividend right attached to the share, the next day would be the ex-date and the next one would be the record-date. The company check the official list of share owners and finds your name there, as all the processing required by the Stock Exchange and the Depository was already over.

This level of complexity was the reason behind the introduction of the Ex-date concept. So all that investors needs to remember is just buy before the Ex-date.

That’s how things work, and all you have to do if you want to be entitled to something attached to the share, is buy that share 1 day before the ex-date. That’s all you need to keep in mind.

– Pay-date

Now the pay-date is the delivery date of the dividend. It doesn’t mean always the date in which the Cash will be visible in your broker’s account, or bank account. As in reality, there is a lots of money to be paid, sometimes in cash, sometimes in checks. So basically that’s the date in which the company starts paying the dividend.

Critical fields

The key details to extract from this event would be:

  • Dividend announcement date
  • Dividend rate
  • Currency
  • Ex-date
  • Recod-date
  • Pay-date

I think this is everything you need to know for the dividend event. I just want you to keep this Settlement-Cycle and its relation to the Ex-date and record date in mind. These dates are also used in other corporate actions such as Rights issue.

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