Ex-Dividend
Ex-dividend describes a stock that no longer includes the right to receive the upcoming declared dividend, meaning new buyers are not entitled to that payment.
Definition
Ex-dividend refers to the status of a stock after it begins trading without the value of its next scheduled dividend. Investors who purchase the stock on or after this point are not entitled to receive the declared dividend.
The transition to ex-dividend status occurs on the ex-dividend date, which determines which shareholders qualify to receive the dividend payout.
How It Works
A stock’s ex-dividend date is typically set one business day before the record date. Shareholders who own the stock before the ex-dividend date are eligible for the dividend.
Once the stock trades ex-dividend, the upcoming dividend is no longer attached to the shares, and new buyers forfeit the right to that payment.
Why the Term Matters
The ex-dividend date establishes dividend eligibility and affects how income distributions are allocated among shareholders. It plays a key role in dividend processing and settlement within equity markets.
Understanding ex-dividend status helps clarify why dividend payments are received by some shareholders and not others.
Related Concepts
- Dividend
- Record Date
- Declaration Date
- Dividend Yield
- Cash Dividends
FAQs
What does ex-dividend mean?
Ex-dividend means a stock is trading without the right to receive the upcoming declared dividend.
What is the ex-dividend date?
The ex-dividend date is the first day a stock trades without the value of its next dividend included.
Who receives the dividend payment?
The dividend is paid to investors who owned the stock before the ex-dividend date.
What happens if I buy a stock on the ex-dividend date?
Buying on the ex-dividend date means the buyer is not entitled to the declared dividend.
How is the ex-dividend date related to the record date?
The ex-dividend date is usually one business day before the record date.
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