Ex-Dividend Date
The cutoff date to own shares and qualify for the next dividend payment. Buy on or after this date and you miss the dividend.
The ex-dividend date (ex-date) is the first day a share trades without the right to the upcoming dividend. To receive the dividend, you must own the shares before this date — settlement rules mean you must buy at least one trading day prior.
On the ex-date, the stock price theoretically drops by the dividend amount at the open, because the dividend entitlement has been removed from the share's value. In practice, market forces often overshadow this adjustment.
Four dates matter for dividends: declaration date (board announces), ex-date (ownership cutoff), record date (shareholder of record), and payment date (cash hits your account).
Example
A company declares a $1.00 dividend with an ex-date of June 10. If you buy on June 9, you receive the $1.00. If you buy on June 10 or later, you do not. The stock typically opens about $1.00 lower on June 10 to reflect this.
Related Terms
Common Stock
The standard class of share that gives holders voting rights and variable dividends. Most publicly traded shares are common stock.
BeginnerDividend
A cash (or stock) payment a company makes to shareholders from its profits, typically on a quarterly schedule.
BeginnerDividend Yield
Annual dividend per share divided by stock price, expressed as a percentage. Shows income return relative to current price.
Beginner