Unpaid Dividend Definition

When a company decided to pay a dividend it declares the dividend amount and the dividend payment date-called the "of record" date. There is then a lag of usually several days during which paperwork is completed, accountants do their accountant thing, and the dividends are actually disbursed. During the period between the date of record and the date of payment, the dividends are unpaid dividends.

Usually this doesn’t much matter for the average shareholder, but what if a company announces the dividend is to be paid on Monday and you sell the stock to Cousin Mark on Tuesday, before the dividends are actually paid? Relax, the shareholder on the date of record is legally entitled to the dividends-Cousin Mark will have to wait for the next dividend payment.