Ex-Dividend Date
The ex-dividend date is the first day a stock trades without the right to receive the upcoming dividend, typically one business day before the record date. Buyers on or after this date will not receive the dividend.
Exam Tip
Ex-dividend date = first day WITHOUT dividend rights. Buy BEFORE ex-date to get dividend. Stock price typically drops by dividend amount on ex-date.
What is the Ex-Dividend Date?
The ex-dividend date (ex-date) is the cutoff date for receiving a stock's dividend. If you buy a stock on or after its ex-dividend date, you will NOT receive the upcoming dividend payment—the seller keeps it.
Key Dividend Dates
| Date | Description |
|---|---|
| Declaration Date | Company announces dividend amount and dates |
| Ex-Dividend Date | First day stock trades without dividend rights |
| Record Date | Company determines shareholders who receive dividend |
| Payment Date | Dividend is actually paid to shareholders |
How It Works
| When You Buy | Dividend Received? |
|---|---|
| Before ex-date | Yes, you get the dividend |
| On or after ex-date | No, seller gets it |
Stock Price Adjustment
On the ex-dividend date, the stock price typically drops by approximately the dividend amount because new buyers aren't entitled to the dividend.
Example:
- Stock closes at $50 on day before ex-date
- Dividend is $1.00
- Stock opens around $49 on ex-date
Settlement and Timing
Stocks settle T+1 (one business day after trade). The ex-dividend date is set one business day before the record date to ensure buyers before the ex-date are registered shareholders by the record date.
Ex-Dividend Date Example
| Date | Event |
|---|---|
| March 1 | Declaration: $0.50 dividend announced |
| March 14 | Ex-dividend date |
| March 15 | Record date |
| March 30 | Payment date |
If you buy on March 13: You receive the dividend. If you buy on March 14: You do NOT receive the dividend.
Investment Strategies
| Strategy | Description |
|---|---|
| Dividend Capture | Buy before ex-date, sell after (risky due to price drop) |
| Avoid Ex-Date Buying | Wait until after ex-date for lower price |
| Long-term Holding | Ex-date less relevant for long-term investors |
Study This Term In
Related Terms
Dividend
SecuritiesA dividend is a distribution of a portion of a company's earnings to shareholders, typically paid quarterly in cash or additional shares.
Common Stock
SecuritiesCommon stock is a security representing ownership in a corporation, giving shareholders voting rights and potential dividends.
Preferred Stock
SecuritiesPreferred stock is a hybrid security with features of both stocks and bonds, offering fixed dividends and priority over common stock in liquidation.