Ex-Dividend Date
The ex-dividend date is the first day a stock trades without the right to receive the next declared dividend. To receive the dividend, you must own the stock before this date.
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Ex-date = 1 business day before record date. Buy BEFORE ex-date to get dividend. Stock price drops by dividend amount on ex-date.
What is the Ex-Dividend Date?
The ex-dividend date is the critical cutoff for dividend eligibility. If you buy a stock on or after the ex-date, you won't receive the upcoming dividend payment.
Important Dividend Dates
| Date | What Happens |
|---|---|
| Declaration Date | Board announces dividend |
| Ex-Dividend Date | First day stock trades without dividend right |
| Record Date | Must be shareholder of record to get dividend |
| Payment Date | Dividend is paid |
The Rule
- Buy BEFORE ex-date = You get the dividend
- Buy ON or AFTER ex-date = You don't get the dividend
- Ex-date is typically 1 business day before record date
Price Adjustment
On the ex-dividend date, the stock price typically drops by approximately the dividend amount (since new buyers don't get the dividend).
Example:
- Stock closes at $50
- Dividend: $1
- Opens ex-dividend at approximately $49
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