Castrol India Shares Set To Trade Ex-Dividend Next Week - Know Difference Between Ex-Date And Record Date

Shares of Castrol India are scheduled to trade ex-dividend in the upcoming week. Earlier on February 3, the company announced a final dividend of Rs 9.5 per share of the face value of Rs 5 each and a Special Dividend of Rs 4.5 per share for the financial year ended December 31, 2024.

The company has also fixed March 18 as the record date for determining the entitlement of members to Final Dividend. Notably, the stock will also trade ex-dividend on March 18. The company added that it is likely to pay the dividend on or before April 23. Shareholders who appear in the company’s records as of March 18 will be eligible to receive dividends.

Dividends are used by companies to distribute profits to shareholders and reward them for their loyalty. Earlier in January 2023, India adopted the T+1 settlement system for equities. Under the T+1 system, trades are settled one day after the trade date. After the adoption of the T+1 system, the ex-date and record date often fall on the same day. Knowing the difference between the record date and the ex-date is important and can help investors have a clearer idea about their eligibility to receive dividends.

Record Date

The record date for the payment of dividends is generally decided by the Board of Directors of a company. On the record date, the company makes a list of all its shareholders who own the company’s shares. The company uses this list to determine which shareholders are eligible to receive the dividend. The record date works as a cut-off date to determine which shareholders will get the dividend and which shareholders will not get the dividend.

Ex-Date

The Ex-date is the day on which the stock trades ‘ex-dividend’ or without dividend. Under the T+1 settlement system, the ex-dividend date falls on the same day as the record date. However, investors must note that they need to buy the stock before the ex-date to become eligible to receive dividends. Investors who buy shares of a company before the ex-dividend date are documented as owners of shares on the record date.

Notably, any investors who purchase the shares on or after the ex-dividend date are not recognized as shareholders on the record date. In such cases the dividend will go to the seller and not the buyer of the shares.

Due to this rule even if an investor sells the shares he or she owns on its record date they are still eligible to receive a dividend. In this case, since the ex-dividend date has already passed, it's the seller of the stock and not the buyer whose name will appear in the company’s books on the record date.

The ex-dividend date can also impact the price of a stock, the price of the share can potentially increase when a dividend is declared. In the days prior to the ex-date, the stock’s demand in the open market can go up, which in turn can increase its price.

To conclude investors should track the ex-date and record-date of stocks to check their eligibility for receiving dividends. Additionally, they should also track the announcement date or the date on which the company announces its intention to pay dividends to its shareholders. Investors should also track the payment date for the dividend.

The payment date refers to the date on which a company credits dividends to its shareholders. Generally, the payment date falls within 30 days from the announcement date in case an interim dividend has been announced. If the company announces a final dividend then the payment date falls within 30 days from its Annual General Meeting (AGM).