Declaration Date

One way companies return money to shareholders is to pay a dividend. (See: Dividend, and watch the video. Spielberg's finest.) A dividend is a cash payment made on each share of stock. Basically, the company is sending out some of its profit as a cash payment, usually quarterly, to its owners (a.k.a. the common shareholders).

The tricky part—and the whole reason we're covering declaration date—is that stocks are constantly traded moment-to-moment on most weekdays and in the aftermarkets all around the world. This fevered activity makes it a little murky in determining just who owns a stock when it's time to send out a dividend.

For this reason, each dividend comes with certain legal ownership technicalities. One of these is the declaration date. This is the date the board of directors announced (or declared) that the dividend is coming. The board will also announce a record date. If you hold shares of stock on the record date, you're going to get the dividend. Lastly, the board announces the payment date, or the date on which the funds will get paid out. All of these announcements have to be filed under strict guidelines...or else. And you don't want else.