When a company wants to determine how their upcoming dividends should be distributed, they use two important dates. These are the record date and the ex-dividend date.
On the record date, the company checks who is eligible to receive dividends and how much they should receive. To make sure that those who want to qualify for the upcoming dividend payments are in possession of the shares at the record date, a company generally uses an ex-dividend date. This date is nearly always two business days before the record date. Any transactions that occurred on or after this date may not be settled in time to qualify for the upcoming dividend distribution.
Therefore, if you want to qualify for an upcoming dividend payment, you would need to be in possession of the shares before the ex-dividend date. If you purchase the shares on or after the ex-dividend date, you will not be eligible for the upcoming dividend payment. On the other hand, if you sell the shares on or after the ex-dividend date, you will still be eligible for the upcoming dividend.
| Note that dividends are paid to investors who own the shares (i.e., have a long position in the share) and that investors with a short position in the shares are liable to pay the dividends. |
The ex- and record dates of a dividend payment can usually be found on the investor relations or press/news release section of the issuer's website. This information is often also published by dedicated financial news sources.