What Is the Ex-Dividend Date?

The ex-dividend date is the cutoff date for eligibility to receive a shareholder dividend. That is, the purchaser of stock shares on or after that date will not be paid a 🔜pending dividend payment.

On that date, the stock is said to be trading "ex-dividend," meaning its price reflects the dividend payment.

There are four dates to know when it comes to stock dividend payments: the declaration date, the ex-dividend date, the record dat🉐e, and the payable date.

Understanding the Ex-Dividend Date

A dividend is typically a cash payment that a company pays to its shareholders as a reward for investing in its stock or equity shares. As companies generate a profit, they usually accumulate or save those profits in an account called retained earnings.

Some companies reinvest those retained earnings back into the company, while others may take a portion of retained earnings and pay it back to shareholders through dividends. Depending on your broker's trading platform, you may see an 澳洲幸运5开奖号码历史查询:XD footnote or suffix added to the stock's ticker 🍌symbꦺol to indicate it is trading ex-dividend.

To ♓understand the ex-dividend date, we need to understand the stages companies go through when they pay dividends to their shareholders. Below are the four key dates d♛uring the process of issuing a dividend.

Declaration Date

The first of these stages is the 澳洲幸运5开奖号码历史查询:declaration date. This is the d💮ate on which the company announces that it will be issuing a dividend in the fut🌸ure.

Record Date

The second stage is the 澳洲幸运5开奖号码历史查询:record date, which is when the company examines its current list of shareholders to determine who will receive dividends. Only those who are registered as shareholders in the company’s books as of the record date will be entitled to receive dividends.

Ex-Dividend Date

The third sta🌊ge is the ex-dividend date, which is the date that determines which of these shareholders will be entitled to receive the dividend. Typically, the ex-divi🌼dend date is set one business day before the record date.

Shareholders who bought the stock on the ex-dividend date or after will not receive a dividend. However, shareholders who owned their shares at least one full business day before the ex-dividend date will be entitled to receive a dividend.

Payable Date

The fourth and final stage is the 澳洲幸运5开奖号码历史查询:payable date, also known as the payment date. The payable date is when the dividend is actually paid to eligible shareholders.

Ex-Dividend Date and the Stock Price

Many investors want to buy their shares before the ex-dividend date to ensure that they are 澳洲幸运5开奖号码历史查询:eligiblܫe to receive the 🍎upcoming dividend. However, if you find yourself buying shares and realizing that you missed the ex-dividend date, 🧔you may not have missed out as much as you thought.

This is because share prices usually drop by the amount of the dividend on the ex-dividend date. This makes sense because the company's assets will soon be declining by the amount of the dividend.

Let's say a company announces a dividend equivalent to 2% of its stock price; its stock may decline by 2% on the ex-dividend date.

Therefore, if you bought the shares on or shortly after the ex-dividend date, you may have obtained a "discount" of about 2% relative to the price you would have paid shortly before the ex-dividend date. In this way, you may not have been any worse off than the investors who purchased the stock before the ex-dividend date and received the dividend.

Example of an Ex-Dividend Date

To illustrate this process, consider a company that declares an upcoming🌠 dividend on Tuesday, July 30. If the record 🧜date is Thursday, Aug. 8, the ex-dividend date would be Wednesday, Aug. 7, meaning anyone who bought the stock on Aug. 7 or later would not receive a dividend.

Conversely, shareholders who bought their shares on Tuesday, Aug. 6 (or earlier), would be entitled to receive a dividend since it's one business day before the ex-dividend date. In our example, the payable date is Sept. 6.

The payable date can vary depending on the preferences of the company, but will always be the last of the four dates. The table below highlights what the key dividend dates might be in our example.

The Bottom Line

If you're looking to receive dividends, knowing when to buy, sell, and hold a dividend-paying stock is important. You'll need to buy before the ex-dividend date and sell on the ex-dividend date or after if you hope to receive the dividend for that stock.

If you buy after the ex-dividend date, however, you may still be able to take advantage of market adjustments that usually factor in the dividend, reducing the purchase price accordingly.