What must occur by the record date for a buyer to receive the dividend?

To be eligible to receive a dividend, a buyer must be the holder of record by the record date. This date is established by the company and indicates the cutoff point for determining which shareholders are entitled to receive the declared dividend.

If a buyer purchases shares but does not settle the transaction before the record date, they will not be recognized as the holder of record on that date and therefore will not receive the dividend. It’s essential for shareholders to be officially recorded on the company’s books as owning the shares to qualify for dividend payments. This ensures that the company can accurately distribute dividends to those who are the rightful owners of its shares on the specified date.

While paying for the shares and completing the trade are important steps in acquiring ownership of the shares, they do not guarantee the receipt of dividends if the transaction isn’t completed before the record date. Approval of the transaction is not a relevant factor in determining dividend eligibility, as that pertains more to securing the purchase rather than ownership status. Thus, being the holder of record by the record date is the critical requirement for dividend qualification.