What Is Ex-Dividend?

A dividend is a cash payment to shareholders as a reward for investing in company stock or equity shares. Ex-dividend means a company's dividend allocations have been spec🎀ified. The ex-dividend date ❀or "ex-date" is usually one business day before the record date.

Investors who purchase a stock on its ex-dividend date or after will not receive the next dividend payment. Instead, the seller gets the dividend. Investors only get dividends if they buy 🌺the stock before the ex-dividend datꩵe.

Ex-Dividend Date

A stock trades ex-dividend on and after the ex-dividend date or ex-date. Investors who buy a stock on the ex-dividend date or after will not receive the next dividend payment. Since buyers aren't entitled to the next dividend payment on the ex-date, the stock will be priced lower by the amount of the dividend by the exchange.

Declaring Dividends

When a company declares a dividend, its board of directors establishes a record date when investors must be on record as shareholders to recei🌼ve the dividen♍d payment. Once the record date is set, the ex-dividend date is also determined according to the exchange rules on which the stock is traded.

The ex-dividend date is one business day before the record date. For example, if a company declares a dividend on March 3 with a record date of Monday, April 11, the ex-dividend date would be Friday, April 8, because it’s one business day before the record date. The ex-di𝐆vidend date is before the record date because of how stock ꦚtrades are settled.

After a stock trade, the transaction isn't settled for one business day, known as the "T+1" settlement. Investors with stock on Thursday, April 7 that is sold on Friday, April 8 would still be the 澳洲幸运5官方开奖结果体彩网:shareholder of record on Monday, April 11, because the trade🌼 hasn't settled. However, if the stock sold on Wednesday, April 6, the trade woul꧃d be settled on Thursday, April 7, before the ex-dividend date of Friday, April 8, and the new buyer would be entitled to the dividend.

Stock Price and Ex-Dividend

Onဣ average, a stock price will drop slightly less than the dividend amount. Given that stock prices move daily, the fluctuation caused by small dividends may be difficult to detect. The effect on stocks from larger dividend payments can be easier to observe.

If a company issues a dividend in stock instead of cash or the 澳洲幸运5官方开奖结果体彩网:cash dividend is 25% or more of the value of the stock, the ex-dividend date rules differ. With a stock or large cash dividend, the ex-dividend date is set on the first business day after the dividend is paid.

Key Dividend-Related Dates

• Declaration date: This is the date when a company's board of directors announces the dividend distribution. Any change in the expected dividend can cause the stock to rise or fall quickly as traders adjust their expectations. The ex-date and record date will occur after the declaration date.
• Record date: This is when the company reviews who the shareholders of record are. The record date is one business day after the ex-date.
• Payment date: Dividend checks are sent or credited to investor accounts.
  

Explain Like I'm Five

A dividend is when a companyꦿ distributes part of its earnings to shareholders. Dividends are announced well in advance, and some investors buy stꦫocks specifically to collect the dividend.

You must own a stock before the ex-dividend date to qualify for a dividend, meaning that you must buy it the day before or earlier. Investors who buy shares on or afteജr the ex-date will not receive the dividend.

The Bottom Line

The ex-🅰dividend date is one of four steps a company follows when paying dividends. The declaration date is when a company announces its plans for a dividend. The record date is when the c✅ompany determines which shareholders are entitled to a dividend. The ex-dividend date is usually the day before the record date. The payment date is the day when dividend payments are made.

Correction—Nov. 28, 2023: This article has been corrected to state the date when a new buyer would 💫be entitled to a dividend.