how unpaid dividends work
to understand unpaid dividends it is helpful to review the four key dates that are part of the dividend payment process the first is the declaration date which is also known as the announcement date this is the date when the company s board of directors announces the upcoming dividend this date is followed by the ex dividend date the date when new buyers of the stock will not be eligible for the upcoming dividend payment the record date also known as the date of record is the next important date in order to be entitled to the upcoming dividend shareholders must be recorded on the company s books by this date typically the record date is two days after the ex dividend date last the payment date is the date when the dividend will be paid to shareholders of record the record date generally occurs about one week after the ex dividend date between the declaration date and the payment date a company will have unpaid dividends on its books once the payments are made the unpaid dividends will be zeroed out accordingly example of an unpaid dividendxyz corporation is a publicly traded company with a price of 30 per share many of its investors view xyz as a stable income producing investment because of its consistent track record of dividend payments eager to maintain this reputation xyz s managers declare an upcoming dividend of 1 50 per share on july 30th its record date is set as thursday august 8th the company s ex dividend date is set for tuesday august 6th in this scenario only shareholders who bought their shares on monday august 5th or before that date would be entitled to receive a dividend the payable date can vary depending on the preferences of the company but it is always the last of the four dates for the period of time between the announcement date on july 30th and the payment date xyz will have unpaid dividends on their books however these will be eliminated once the dividends are paid to shareholders 