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Wednesday, May 17, 2017 1:49:26 PM
Net Savings Link, Inc. (OTC: NSAV) announced today that the Company has declared a 10% stock dividend to stockholders of record on June 1, 2017.
Does the Settlement Date Have to Occur Before the Ex-Dividend Date to Receive a Dividend?
Find out whether that dividend payment actually belongs to you.
Dividends are a key source of investment income, but there's a lot of confusion about the mechanics of how dividends actually get paid. In particular, when you buy a stock close to when it will pay a dividend, it's important to know whether you'll actually receive the dividend payment or not. That's where concepts like the record date, ex-dividend date, trade date, and settlement date all come into play.
The short answer: No
The simple answer to the question in the headline is that the settlement date doesn't necessarily have to occur before the ex-dividend date in order for the shareholder to receive the dividend. To understand fully, though, you need to get into the details.
When a company pays a dividend, it sets what's called the record date. That's the date when the company looks at its official list of shareholders to decide who will receive the dividend. It then sets a payment date that's anywhere from a few days to several weeks later; it's on this day that shareholders actually receive their dividend payments.
That would be straightforward if stock trades were instantaneous. However, stock exchanges still use rules that give brokers three business days to settle stock trades. That means that, if you make a stock trade to buy shares, they won't officially land in your account until three business days later, which is known as the settlement date.
As a result, one way to express the rule is that, in order to receive the dividend, your settlement date must happen on or before the record date the company has set for the dividend. If it's after, you won't receive the dividend.
https://www.fool.com/knowledge-center/does-the-settlement-date-have-to-occur-before-the.aspx
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