Why is the Dividend Declaration
Date so important?



The Dividend Declaration Date is
a date that matters

Before a company can pay dividends to its shareholders, it has to go through a legal and regulatory procedure that includes the announcement of a date to declare the dividend, the ex-dividend date, the date of record, and the date of the dividend payout.

Why is the dividend declaration date important?

That is the day that the Board of Directors announces their intention to pay a dividend. As from this day on, the company owes money to the shareholders.

It is only after declaring the payment of the dividend that the company is committed to making the dividend payment to its shareholders.

On the dividend declaration date, the Board will issue a dividend announcement that will include:

  • The amount of the dividend, stated in pence per share

  • The date of the dividend payout

  • The dividend record date

In the dividend declaration the company announces three dates :- the ex-dividend date, the record date and the payment date.

Example of a dividend declaration

RNS Number : 3124C
Scottish & Southern Energy PLC
11 November 2009

11 November 2009 (the dividend declaration date)

Scottish and Southern Energy plc

Financial report for the six months to
30 September 2009

.....

Interim Dividend

SSE's first responsibility to shareholders is to deliver sustained real growth in the dividend. The Board is declaring an interim dividend of 21.0 pence per share, compared with 19.8p in the previous year. This is an increase of 6.1% compared with 2008/09 and is more than double the interim dividend paid in 2002, since when there has been compound annual growth in the dividend of 10.1%.

.....

Investor timetable

Ex-dividend date 17 February 2010
Record date 19 February 2010
Payment date 26 March 2010
Financial results for 2009/10 20 May 2010
AGM (Bournemouth) 22 July 2010

.....

Future Dividend Intentions

Sometimes, a company will also issue a special declaration including its future dividend policy.

When they do, take note!

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WE WOULD LIKE TO POINT OUT, THAT:

1.√the above mentioned announcement is an abridged version of the full announcement which can be found HERE

2.√the above mentioned announcement is solely used as an example of a UK listed company's dividend declaration and is not a share recommendation

3.√the price of shares and investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested

4.√where the information consists of pricing or performance data, the data contained therein has been obtained from company reports, financial reporting services, periodicals, and other sources believed reliable

5.√data computations are not guaranteed by Early Retirement Investor.com or any of the data providers and may not be complete.

6.√The editor or contributors may have an interest in the share mentioned.

7.√Dividend yields move up and down. As a company’s share price increases the dividend yield falls. And vice versa: if the share price falls the dividend yield increases.

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