Invest and Trade Profitably with Jon Johnson

Why does your stock split calendar not list the record date?

August 30, 2000

You will not find a record date on ourstock split calendar because the record date is meaningless. Here’s a definition of “record date”: The record date is a date, set by the issuing company, on which an individual must own shares to be eligible to receive a declared dividend or capital gains distribution. With regard to stock splits, the record date is used for accounting purposes only and has no significance to individual investors. Your shares will split as long as you bought them before the ex-date (also known as ex-dividend date).

Again, the record date is meaningless. Don’t concern yourself with the terminology. It’s simply an “accounting thing” with the company. The split will take care of itself. There is nothing to ever worry about. In its very simplest form, assume a stock is trading around $100 and is to split 2-1. If you pay $100 for the stock AND you still hold it when it actually splits, (ie, when it starts trading at about $50 –assuming it hasn’t fallen in price dramatically), then you can be assured that you will receive the “extra” shares. However, if you pay $50 for the stock, then you know that the shares have already split.

&nbsp So, why even state a “shareholder of record” date?

&nbsp The “shareholder of record” date goes back to the time when most shares were held individually as paper certificates. On the record date, the company would actually send a certificate to the shareholder for the additional number of shares created by the split. Today, most of us hold shares in a brokerage account. The broker, then, is the owner of record. The additional split shares are distributed to our broker, who will transfer them to our account. The paperwork involved for shares bought or sold between the date of record and the payable date is usually handled between the company or its transfer agent and the broker.

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