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The stockholder of record is the registered owner of a security. Dividends and other distributions are paid to the stockholder of record. Stock purchased through a brokerage typically lists the brokerage as the stockholder of record, with the account holder being the beneficial owner. When a dividend is paid, it goes to the brokerage as the stockholder of record. The brokerage in turn pays the dividend to the beneficial owner. If the shares are subsequently issued in certificate form, the account holder would then become the stockholder of record.
The distinction between stockholder of record and beneficial owner was created to smooth the process of trading stock. By listing brokerages as the stockholder of record, the party on the other end of the transaction can assume the trade is legitimate with minimal time and expense spent on verification. |
