ex-dividend date
The cutoff date to qualify for a company's next dividend payment. Investors who buy on or after this date do not receive the upcoming dividend.
Example
“She bought the stock the day before the ex-dividend date to qualify for the $0.50 quarterly dividend.”
Memory Tip
EX-dividend date = buy BEFORE this date to get the dividend. After = you miss it.
Why It Matters
Understanding the ex-dividend date helps you make informed investment decisions about when to buy or sell stocks if you want to receive upcoming dividend payments. Missing this date by even one day means you will not receive the next dividend payment, which can impact your expected returns and investment income strategy.
Common Misconception
Many people believe that if they buy a stock just before the dividend is paid out, they will automatically receive that dividend. In reality, you must own the stock before the ex-dividend date, not the payment date, which typically occurs several weeks earlier than when the actual cash reaches your account.
In Practice
Suppose Company XYZ announces a quarterly dividend of 50 cents per share with an ex-dividend date of March 15th. If you purchase the stock on March 14th, you will receive the 50-cent dividend, but if you buy it on March 15th or later, you will not receive this payment. The stock price typically drops by approximately the dividend amount on the ex-dividend date to reflect this change in ownership rights.
Etymology
EX- (without, excluded from) DIVIDEND DATE. The date FROM which buyers are EX (excluded from) the dividend.
Common Misspellings
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