The dividend calendar: which dates matter and why

Not every date in the dividend cycle matters, only those that change your rights or the movement of money: the day the board of directors makes its recommendation, the day the shareholders' meeting approves the payout, the record date, the last trading day on which a purchase still gets you onto that register, and the day the funds are credited to your account. Everything else in the payout card is derived from these markers. The nearest events are easy to follow in the dividend calendar: {{dividend_calendar|limit=5}}

A recommendation is not yet a payout

The board of directors recommends the size of the payout, while the decision is taken by the general meeting of shareholders. The meeting may approve the recommended amount, but it may not set a higher figure than the board recommended. In practice this means that an entry in the calendar has a status: "recommended" and "approved" are different states of the world. Time passes between them, and during that time the payout remains likely, not guaranteed: recommendations have been withdrawn, meetings have been postponed, agendas have been changed.

Hence the rule for reading the calendar: until approval, the record date is provisional. Check it against the issuer's announcements in the news feed and against the corporate events calendar, where shareholders' meetings appear as separate entries.

The record date and the last day with the dividend

The right to the payout goes to whoever is listed as the owner of the security on the record date, also known as the cut-off. But buying the share on the cut-off day is already too late: exchange trades are executed with deferred settlement, and the entry recording the change of owner appears at the depository later than the trade date. That is why the last day on which a purchase still carries the right to the dividend comes earlier than the record date.

The size of this shift is set by the Moscow Exchange settlement regime, and it has changed along with the reforms of the settlement cycle. Keeping it in your head is a bad idea; it is stated explicitly in the payout card, and that is what you should rely on. This is a case where the calendar replaces memory instead of supplementing it.

{{callout:warning}}Selling the share after the cut-off but before the payment does not take away your right to the money: the register has already been fixed. The reverse is also true: a purchase after the cut-off brings no money, however long remains until the transfer.{{/callout}}

The ex-dividend day: why the price drops by itself

On the day the security starts trading without the right to the payout, the price opens lower: the market subtracts from it the amount that will soon leave the company. This is the dividend gap, and it is not an anomaly but arithmetic: the asset has become poorer by the declared payout. The gap is roughly equal to the payout, but it does not have to match it, because on the same day the price is also affected by holders' tax expectations, the order flow and the general market backdrop.

The practical conclusion is an unpleasant one for a beginner: buying on the eve of the cut-off, collecting the payout and selling is not a way to make money. You are exchanging part of the share's market value for money that will arrive later and in a smaller amount than declared, because the tax will be withheld at payment.

Payment deadlines and what actually reaches the account

The law on joint-stock companies limits the period for the transfer, counting it from the date on which the persons entitled to dividends are determined (article 42). Nominee holders and trust managers are paid before everyone else, so a private investor using a broker usually receives the money closer to the start of this window, and not on the cut-off day. On top of that comes the broker's internal period for allocating the funds, which is not described in the law and differs from broker to broker.

Dividends on Russian shares arrive already net of tax: the issuer or the depository acts as the tax agent. Dividends also stand apart from other income from securities; for the legal parameters of the tax base, see the constant 13%. That is exactly why a loss on the portfolio does not reduce the tax on dividends, and the deductions that work for purchase and sale transactions do not apply to them.

What the calendar does not show

The calendar answers the question "when", but is silent on "how many more times". The sustainability of a payout is visible not there but in the financial statements and the dividend policy: the share of profit distributed to shareholders, the debt burden, and the non-recurring asset sales that make the payout in a particular year irregular. This is worth checking in the issuers' financial statements and in the valuation of the security, for example 3,77 for {{instrument:SBER}} alongside the payout history in the dividends section.

One more limitation should be stated honestly from the start: the calendar shows what has been declared, not the future. Until there is a recommendation, there is no line, and the absence of an entry does not mean that there will be no payout.

How to use it

A useful sequence for working with the calendar looks like this. Step 1: select the payouts by deadlines that genuinely leave you time to make a decision. Step 2: check the status, whether it is a recommendation or an approval by the meeting. Step 3: look at the last day to buy with the right to the payout, not at the cut-off date. Step 4: decide in advance what you will do with the money once it is credited, because the pause between the payout and the repeat purchase is where the result is quietly lost; the mechanics are covered in the article on reinvestment.

If payouts are not the only thing you follow, the dividend calendar is worth keeping next to the events calendar: reports and meetings often explain why the recommendation turned out exactly as it did. For bonds the logic is different: there the coupon dates are known in advance from the terms of the issue, and the calendar is needed for planning the cash flow, not for chasing the cut-off; see the OFZ section. The definitions of the terms dividend calendar and investor calendar are collected in the glossary.