What is Ex-Dividend? | Option Alpha

The ex-dividend date is the day a security begins trading without the value of the next dividend. To receive the upcoming dividend payment, the stock must be purchased or owned before the ex-dividend date. On the ex-dividend date, new purchasers of the stock are no longer entitled to receive the recently declared dividend.

Investors who purchase stock on or after the ex-dividend date own the stock but do not receive the declared dividend. If a stock is purchased on the ex-dividend date, the dividend payment goes to the seller instead of the buyer.

For example, if a company declares a $0.50 per share dividend on June 1st and the ex-dividend date is June 8th, an investor who buys the stock on or after the ex-dividend date would not receive the dividend, while an investor who bought the stock before the ex-dividend date would receive the dividend.

The stock's share price typically decreases by the dividend amount on the ex-dividend date to reflect that new purchases of the stock do not get the declared dividend.

The ex-dividend date is before the record date. The record date is the day that you must be on the company's books as a shareholder to receive the dividend. The ex-dividend date is usually two business days before the record date.

The payment date is the day the dividend check is mailed or direct deposited into your account. For most companies, the payment date is several weeks after the ex-dividend date.

FAQs

Will I get the dividend if I buy the stock on the record date?

No. The stock must be purchased prior to the record date to receive the dividend.

How long do I have to own a stock to get the dividend?

Most stock trades have a settlement that occurs two days after the transaction. Therefore, a stock must be purchased the day before the ex-dividend date.

What happens to the stock price on the ex-dividend date?

The share price of a stock typically goes down by the dividend amount on the ex-dividend date to reflect that new purchases of the stock do not get the declared dividend.

What is the difference between the ex-dividend date and the record date?

The ex-dividend date is the day a security begins trading without the value of the next dividend. To receive the upcoming dividend payment, the stock must be purchased before the ex-dividend date.

On the ex-dividend date, new purchasers of the stock are no longer entitled to receive the recently declared dividend. Purchasers of stock on or after the ex-dividend date own the stock but do not receive the declared dividend. If a stock is purchased on the ex-dividend date, the dividend payment goes to the seller instead of the buyer.

The record date (or holder of record date) is the day set by the corporation to determine who is entitled to receive the declared dividend payment. To receive the dividend payment, a stockholder must own the stock as of the record date and the ex-dividend date. The record date is after the ex-dividend date and before the payment date.