As a shareholder you are entitled to a share in the company's profits or earnings. Paying a dividend is one way to reward shareholders. For many investors a key criteria in selecting shares, is whether a company pays dividends and the size of those dividends.
Many ASX listed companies pay dividends twice each year, usually as an 'interim' dividend and a 'final' dividend. Companies are not limited to paying twice a year and may pay more or less frequently. A company may also pay a 'special' dividend, related to a particular event. There is no requirement for the company to pay a dividend from earnings, some companies might elect to reinvest the earnings back into the business.
How are dividends released?
Dividend data is usually available the day after the company has announced the dividend, simply type in the company code to view the last four dividend payments. Only cash dividends are displayed.
The amount of dividend is usually a percentage of company earnings and is called the dividend payout ratio. Each dividend has a Record Date, ex dividend date and date payable.
The Record Date is 5.00pm on the date a company closes its share register to to determine which shareholders are entitled to receive the current dividend. It is the date where all changes to registration details must be finalised.
Ex dividend date
The ex dividend date occurs one business day before the company's Record Date. To be entitled to a dividend a shareholder must have purchased the shares before the ex dividend date. If you purchase shares on or after that date, the previous owner of the shares (and not you) is entitled to the dividend.
A company's share price may move up as the ex dividend date approaches and then fall after the ex dividend date.
The Date Payable is the date on which a company's dividend is paid to shareholders.
Before the ex dividend date the shares are said to be cum dividend. If you buy shares whilst they are cum dividend you are entitled to the recently announced dividend.
|Record Date||Ex-Dividend Date||Date Payable||Dividend Amount|
- Find out more about the language of the sharemarket via the glossary
- Find out what dividends are and how franking credits work in our free online class "Risks and benefits of shares"
- There are a number of other codes and terms which provide further information about the trading status of a security. View the Status notes page.
- Access dividend information for ASX listed companies.