A payable date represents the day on which a declared dividend is scheduled to be paid. The dividend payable date typically is weeks or even months from the date on which a company makes a dividend announcement, and a stock broker typically is aware of these announcements. The payable date of a dividend is one of several key dates that determine which investors are entitled to the distribution.
Dividends are cash or stock distributions paid by a publicly traded company to shareholders, both common stockholders and preferred shareholders. Certain companies pay consistent, uninterrupted dividends for decades, and some investors come to depend on distributions made on a payable date for their income. In some cases, if a company is short on cash and is not in a position to issue additional stock, it might pay dividends in the form of a product or service that it provides.
Dividends are paid from a company's retained earnings or current profits. These distributions are made on a quarterly or yearly basis. The board of directors of a company might decide to raise or suspend a dividend distribution based on the amount of profits that are generated in a period of time. For instance, if a company's profits exceed internal expectations in a quarter, the board could decide to use the excess to reward investors or to put toward some growth initiative. During times of economic contraction, a dividend might cease altogether.
Often, a company declares a dividend on the day that quarterly earnings are reported. A payable date is included in the announcement and as part of regulatory filings in the region. In addition to naming a date, a company reveals the amount of the dividend, whether it is being paid in cash or stock and another date known as a date of record. Investors who own shares of a stock on or before the date of record are entitled shareholders for the distribution.
The financial markets can be volatile, so trades, which are buy and sell orders, must be settled or completed in a reasonable amount of time. In the United States, it typically takes three days for a stock market trade to settle, or to be formalized. Another date, known as an ex-dividend date, determines which shareholder technically has possession of a stock on the date of record. Investors who purchase shares of a stock on or after the ex-dividend date are not entitled to the most recently announced dividend payment. An investor who sells a stock on or after the ex-dividend date is eligible for that distribution.