Record date

Record date

(1) Date by which a shareholder must officially own shares in order to be entitled to a dividend. For example, a firm might declare a dividend on Nov. 1, payable Dec. 1 to holders of record Nov. 15. Once a trade is executed, an investor becomes the "owner of record" on settlement, which currently takes five business days for securities and one business day for mutual funds. Stocks trade ex-dividend the fourth day before the record date, since the seller will still be the owner of record and is thus entitled to the dividend. (2) The date that determines who is entitled to payment of principal and interest due to be paid on a security. The record date for most MBS is the last day of the month, although the last day on which an MBS may be presented for the transfer is the last business day of the month. The record dates for CMOs and asset-backed securities vary with each issue.

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record date

The date on which a firm's books are closed during the process of identifying the owners of a certain class of securities for purposes of transmitting dividends, interest, proxies, financial reports, and other documentation to them. For example, only the common stockholders who are listed on the record date will receive the dividends that are to be mailed on the payment date. Also called date of record. See also ex-dividend, interest dates.

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Record date. To be paid a stock dividend, you must own the stock on the day that the corporation's board of directors names as the record date, also known as the date of record.

For example, if a company declares a dividend of 50 cents a share payable on September 1 to shareholders of record as of August 10, you must own the shares on August 10 to be entitled to the dividend.

To be the legal owner on the record date you must buy the stock at least three business days before the record date. That is the last day on which trades will settle on the record date.

If you buy the stock after that day, you are buying the stock ex-dividend, which means you are not entitled to the dividend. The first day the buyer is not entitled to receive the dividend is called the ex-dividend date and is currently two days before the record date in most cases.