Question

What are the three relevant dates involving cash dividends? Describe each.

Short answer

The three important dates including cash dividends are the declaration date, date of record, and the date of payment.

Step-by-step solution

Introduction to the topic

Cash dividends are the most widely recognized type of payment and are paid out in cash the corporate possesses to the stockholders.

Such dividends are a type of investment income of the shareholder, usually treated as acquired in the year they are paid.

The three relevant dates involving cash dividends-

1. Declaration date:

On the date of declaration, the board of directors of the corporation announces the intention to pay the dividend. The cash dividend declaration creates an obligation for the corporation.

2. Recording date:

The recording date is the date on which the corporation records which stockholders get dividend checks.

3. Payment date:

It is the date on which the actual payment of dividends is made to the stockholders. Dividend payment generally follows the record date by possibly a week or two.