Ex-Dividend Date

When a company declares a dividend, it sets a record date, the date on which it checks its register of shareholders to see who should be paid. Because share trades take time to settle, stock exchanges set an ex-dividend date shortly before the record date. In many markets today, with trades settling one business day after the trade, the ex-dividend date and record date are often the same day or one day apart, depending on local rules.

To receive the dividend, an investor must buy the shares before the ex-dividend date. Someone who buys on the ex-dividend date or later will not receive it.

For example, if a company declares a dividend of 1.00 per share with an ex-dividend date of 10 June, an investor who buys on 9 June receives the dividend, while one who buys on 10 June does not.

On the ex-dividend date, the share price usually falls by roughly the amount of the dividend, because new buyers are no longer entitled to it. This is why buying shares just before the ex-dividend date to capture the dividend does not usually produce an easy profit.