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What the ex-dividend date is
To receive a declared dividend, you must own the shares before the ex-dividend date. If you buy on or after that date, you are not entitled to that particular payment, and the seller keeps it instead.
The word ex means without, so on and after the ex-dividend date the shares trade without the right to the upcoming dividend. It is simply the line that separates who gets paid from who does not.
The key dividend dates
A dividend involves a short sequence of dates. The declaration date is when the company announces the dividend. The ex-dividend date is the ownership cutoff. The record date is when the company checks its books for who owns the shares. And the payment date is when the cash actually arrives.
For an investor, the ex-dividend date is the one that matters most, because it determines whether you are on the list to be paid.
- Declaration date: the company announces the dividend
- Ex-dividend date: the ownership cutoff to qualify
- Record date: the company confirms who owns the shares
- Payment date: the cash is paid out
Why the price drops on that day
On the ex-dividend date, a stock's price typically falls by roughly the amount of the dividend. The reason is simple: a buyer on that day will not receive the upcoming payment, so the shares are worth slightly less without it.
This is why you cannot get free money by buying just before the ex-date and selling just after. The dividend you collect is offset by a corresponding drop in the share price.
💡 Buying just before a dividend is not free money:The price usually falls by about the dividend amount on the ex-date, and the dividend is taxable. Chasing a payment by buying right before the cutoff does not create value out of thin air.
What it means for you
For a long-term investor, the ex-dividend date rarely needs to drive decisions. Trying to time purchases and sales around it, a tactic sometimes called dividend capture, is difficult to do profitably once the price drop and taxes are accounted for.
It is more useful simply to understand the date so you know whether a recent purchase qualifies for the next payment, and why the price moved the way it did.
Frequently asked questions
What is the ex-dividend date?
It is the cutoff date that determines who receives a declared dividend. You must own the shares before the ex-dividend date to qualify. Buy on or after it and you will not receive that particular payment, the seller will.
Do I get the dividend if I buy on the ex-dividend date?
No. To receive the dividend you must own the shares before the ex-dividend date. If you buy on or after that date, the seller is entitled to that payment, not you.
Why does the share price drop on the ex-dividend date?
Because a buyer on that day no longer receives the upcoming dividend, so the shares are worth slightly less without it. The price typically falls by roughly the dividend amount, which is why buying just before the cutoff does not create free value.
What are the four dividend dates?
They are the declaration date, when the dividend is announced; the ex-dividend date, the ownership cutoff; the record date, when the company confirms owners; and the payment date, when the cash is paid. The ex-dividend date is the one that decides eligibility.
Related tools and pages
These are for learning. Any calculator here shows example scenarios, not predictions of future prices.
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