Ex-dividend date

The ex-dividend date is the date on and after which a stock trades without the right to its next declared dividend. An investor who buys the stock on or after the ex-dividend date will not receive that upcoming dividend payment, while an investor who already owned the stock before that date will still receive it, even if they sell on the ex-dividend date itself.

The ex-dividend date is set relative to the record date, the date a company checks its records to determine exactly who owns the stock and is entitled to the dividend, based on the standard settlement cycle for stock trades. Because of how settlement works, the ex-dividend date typically falls a short time before the record date, so that anyone who buys before the ex-date will be a recorded owner by the time the record date arrives.

On the ex-dividend date, a stock's price typically drops by roughly the amount of the dividend, since new buyers are no longer entitled to that cash payment and the company's value has effectively been reduced by the amount it is about to pay out. This is a mechanical adjustment rather than a reflection of any change in the underlying business, and it is one reason dividend history needs to be accounted for when comparing a stock's price performance over time.