Existing shareholders of a company's stock receive notification, typically by mail, when the company declares a dividend payment. Included in the information, along with the amount of the dividend, the record date, and the payment date is the ex-dividend date. Investors who do not already own shares of a company's stock can find weekly listings of upcoming ex-dividend dates through financial and investment information websites, such as Barrons.com.
There are three important dates involved with the process of a company paying a dividend: the declaration date, the ex-dividend date, and the record date.
The Declaration Date
The declaration date is when a company's board of directors announces that the company will be paying a dividend. In the declaration, the company discloses the amount of the dividend and the ex-dividend, record, and payment dates. Companies often issue dividend declarations on a regular quarterly, semi-annual, or annual schedule. Dividend declarations often accompany earnings announcements.
Existing shareholders receive the declaration information directly from the company, usually by a notice in the mail. Investing information websites regularly publish upcoming ex-dividend dates, along with the amount of the dividend.
The Ex-Dividend Date
The ex-dividend date is the critical date that determines who qualifies to receive the dividend. To receive the dividend, investors must purchase the stock no later than the day before the ex-dividend date. Before trading begins on the ex-dividend date, the share price is reduced by the exchange in the amount of the dividend. Beyond that point, the stock is trading ex-, or without, the dividend. The ex-dividend date in the United States is one business day prior to the record date.
The Record Date
The record date is simply the date when the company officially records the stockholders who are eligible to receive the dividend – the shareholders who purchased the stock prior to the ex-dividend date.
The Payment Date
The final date associated with dividend payments is the payment date, the date when the company pays the dividend. The payment date typically follows the ex-dividend date by about a month.
FAQs
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.
How to find ex-dividend dates for stocks? ›
Existing shareholders receive the declaration information directly from the company, usually by a notice in the mail. Investing information websites regularly publish upcoming ex-dividend dates, along with the amount of the dividend.
How to calculate ex-dividend date? ›
The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date). If you sell your stock before the ex-dividend date, you also are selling away your right to the stock dividend.
Do I have to own a stock on the ex-dividend date to get the dividend? ›
Key Takeaways. You must buy a stock before the ex-dividend date to receive the recently declared dividend. If you buy the stock on the ex-date, you will not be entitled to the dividend because on that date, the stock begins trading ex-dividend, or "without dividend."
How many days before the ex-dividend date should I buy a stock? ›
The ex dividend date and record date are closely related and often confused. The ex-dividend date is one business day before the record date when the shares begin to trade without their dividend. If you buy stocks one day or more before their ex-dividend date, you will still get the dividend.
Who determines the ex-dividend date? ›
The U.S. Securities and Exchange Commission sets the ex-dividend date to one day before the record date, so that buy and sell information is captured before the record date. The time difference between the dividend record date and ex-dividend date allows the necessary time to prepare paperwork and electronic records.
Where can I find the dividend history of a stock? ›
Sites like CNBC, Morningstar, The Wall Street Journal, and Investopedia are all great resources available for researching dividend data. For example, on Investopedia's Markets Today page, you can use the stock search tool to enter the company name or ticker symbol that you're researching.
Do stocks always drop ex-dividend date? ›
With dividends, the stock price typically undergoes a single adjustment by the amount of the dividend. The stock price drops by the amount of the dividend on the ex-dividend date. Remember, the ex-dividend date is typically the same day as the record date.
What is the ex-dividend date for a stock? ›
Ex-dividend means a company's dividend allocations have been specified. 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.
Is it better to sell stock before the ex-dividend date? ›
Key Takeaways. Shareholders who sell their stock before the ex-dividend date do not receive a dividend. The ex-dividend date is the first day of trading in which new shareholders don't have rights to the next dividend disbursem*nt. If shareholders continue to hold their stock, they may qualify for the next dividend.
The ex-dividend date is the first day the stock trades without its dividend, thus ex-dividend. If you want to get the dividend payment, you need to own the stock by this day. That means you have to buy before the end of the day before the ex-dividend date to get the next dividend. In other words, it's the cut-off date.
How many months should I hold a stock to get dividend? ›
How Long Do I Need to Own a Stock to Collect the Dividend? To collect a stock's dividend you must own the stock at least two days before the record date and hold the shares until the ex-date.
Can you buy a stock just for the dividend and then sell? ›
“Dividend capture strategy” returns are the trading technique of buying a stock just before the dividend is paid, holding it just long enough to collect the dividend, then selling it. If you can sell it for as much as you paid, you have “captured” the dividend at no cost, other than the transaction costs.
How soon after the ex-dividend date can I sell stocks? ›
Another important note to consider: as long as you purchase a stock prior to the ex-dividend date, you can then sell the stock any time on or after the ex-dividend date and still receive the dividend. A common misconception is that investors need to hold the stock through the record date or pay date.
How do I find my dividend history? ›
You can access your historical dividend payments by contacting the share registries that the company is associated with. The share registry will be able to provide you with information such as payment history and tax statements.
Will I get dividend if I sell before my ex-date? ›
Shareholders who sell their stock before the ex-dividend date do not receive a dividend. The ex-dividend date is the first day of trading in which new shareholders don't have rights to the next dividend disbursem*nt. If shareholders continue to hold their stock, they may qualify for the next dividend.
What is the ex-dividend date alert? ›
Stocks Ex-Dividend Dates Alerts is a pre-set screener. It gets you worth-buying stocks with recent ex-dividend date. A stock's ex-dividend date is one business day before the record date. Investors who buy the stocks on or after that day will not receive dividend.