A stock’s price will dip when a dividend payment is made. Best Dividend Capture Stocks recover quickly after their ex-dividend date.
“What is an ex-dividend date?” is a question that we see often here at Dividend.com. The ex-dividend date is the day on which all shares bought and sold no longer come attached with the right to be paid the most recently declared dividend. This is an important date for any company that has many stockholders, including those that trade on exchanges, as it makes reconciliation of who is to be paid the dividend easier.
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A dividend-paying stock’s ex-dividend date, or ex-date, is very important to investors. In a nutshell, if you buy a dividend stock before the ex-dividend date, then you will receive the next upcoming dividend payment. If you purchase the stock on or after the ex-dividend date, you will not receive the dividend. Some investors utilize strategies whereby they will purchase stocks just prior to an ex-dividend date and sell shortly thereafter. This is known as dividend capturing.
It is always helpful for investors to keep an eye on an ex-dividend calendar to make sure they stay in the know about the important dates concerning a dividend’s payout. The ex-dividend date is arguably the most important date to know for a particular stock, as it dictates whether or not you receive the dividend as an investor; the remaining three major dividend dates take something of a backseat to ex-dates.
Ex-dividend dates are set by the respective stock exchange or by the National Association of Securities Dealers and falls two days before the date of record, another important dividend date. Note that the ex-dividend date is typically one month after the date of declaration and a little over a month prior to the actual payment date of the dividend. Here is an example of a typical dividend date schedule for the hypothetical stock ABC:
|July 5th||Date of Declaration|
|August 5th||Ex-Dividend Date|
|August 7th||Date of Record|
|September 7th||Payment Date|
On the actual ex-dividend date, the stock will drop by the amount of the dividend, so if stock ABC is paying out a dividend or $0.30 per share, its stock price will generally fall by that amount. Note that depending on how the market moves on that particular day the latter point does not always hold. Recognizing that a stock is only down on a day because it is going ex-dividend is a good investing practice and will help you make better sense of the market [see also Everything Investors Need to Know About Ex-Dividend Dates].
The converse of this rule also holds true — if you sell a stock before the ex-dividend date, you will not receive the dividend, but if you sell on or after the ex-dividend date, you will.
All dividend payout and date information on this website is provided for information purposes only. We can not and do not guarantee the accuracy of any dividend dates or payout amounts. Dividend dates and payouts are always subject to change. Always check with your broker first before purchasing any security.