Final answer:
The investor or lender of a loaned stock is entitled to dividends. In stock lending, brokers or borrowers compensate the lender with equivalent payments to ensure they receive the benefits of the dividends.
Step-by-step explanation:
The party that is entitled to the dividend on a loaned stock position is the investor or lender of the stock. When a stock is loaned, the borrower (such as a broker) is obligated to pay the equivalent of the dividends to the person from whom they borrowed the stock.
It is important to note that shareholders are people who own at least some shares of stock in a firm. They are typically entitled to receive dividends, which are a form of direct payment from the firm to its shareholders.
In the context of stock lending, diverts like dividends are compensated to the lender, ensuring that they do not miss out on the profits they would have received if they held the stock directly during the dividend payout period.