Why does it take two weeks (from ex-date) for dividends to pay out?
Example Dividend Schedule
This happens for both US and Canadian listings. Is there a regulatory/historical reason for this occurrence?
E.g. From my understanding, the trade settlement period exists because historically, stock certificates needed to be physically delivered to the new owner.
I tried looking for rationale on SEC, Investopedia - no results.
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So from Investopedia - Who actually declares a dividend states that the Board of Directors of a company sets the 4 key dates:
Declaration Date/Date of Announcement
Ex-Dividend (implied by Date of Record due to T+3 regulation)
Date of Record
Payable Date
As these dates are chosen by the Board of Directors, either by internal corporate convention or special situation. Conceivably a Board may choose a Payable Date greater than 2 weeks which may make sense if their accounting partners are unavailable, i.e. extended national holiday. I assume that any period of time longer that what may seem reasonable and customary will be a topic at the next shareholder meeting.
Why does it take two weeks (from ex-date) for dividends to pay out?
For logistical and accounting purposes. This article says on the payment date:
This date is generally a week or more after the date of record so that the company has sufficient time to ensure that it accurately pays all those who are entitled.
It is for the same reasons that there is a often a two-week period between the time an employee submits her time sheet and the employee's pay date. The company needs time to set and send the payment while minimizing accounting errors.
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