What is an ex-dividend date?
The ex-dividend date (often shortened to ex-date) is the first day a stock trades without its next dividend attached. If you buy the shares on or after the ex-dividend date, you do not receive that dividend. If you own the shares before it, you do.
How to make sure you get the dividend
You need to own the shares before the ex-dividend date. In practice, that means buying no later than the business day before it. That day is the last day to buy, and it is the date most dividend investors circle in their calendar.
- Ex-dividend date is a Friday: buy by the close of Thursday.
- Ex-dividend date is a Monday: buy by the close of the previous Friday, because weekends do not count.
- You can sell on the ex-dividend date or later and still receive the dividend, as long as you owned the shares before it.
Why the ex-dividend date is one business day before the record date
A company pays its dividend to the shareholders listed on its books on the record date. Since US stock trades began settling one business day after the trade (called T+1, in effect since May 2024), the ex-dividend date and the record date fall on the same day for most US stocks. Buying before that day gets your name on the list in time.
What happens to the share price
On the ex-dividend date the share price usually opens lower by roughly the amount of the dividend, because new buyers no longer get it. Other things move the price too, so the drop is rarely exact. This is why buying a stock only to collect a dividend does not create free money: the price adjusts.
Frequently asked questions
Do I get the dividend if I buy on the ex-dividend date?
No. You must own the shares before the ex-dividend date, so buy by the close of the previous business day.
Do I keep the dividend if I sell on the ex-dividend date?
Yes. If you owned the shares before the ex-dividend date, you still receive the dividend even if you sell on that day or later.
Why does the price drop on the ex-dividend date?
New buyers no longer receive the upcoming dividend, so the share price usually opens lower by about the dividend amount.
Keep reading
- Ex-dividend date vs record date vs payment date
- How dividend yield works
- How to build monthly dividend income
General education only, not investment, tax or legal advice. Rules can differ by country and security.