You must own a security by the record date the company sets to be entitled to the dividend it will pay on the payable date. The period between those dates -- anywhere from a week to a month or more -- during which new investors in the security are not entitled to that dividend is called the ex-dividend period. On the day the ex-dividend period begins, which is the first trade date that will settle after the record date, the stock is said to go ex-dividend. Generally, the price of a stock rises in relation to the amount of the anticipated dividend as the ex-dividend date approaches.
It drops back on the first day of the ex-dividend period to reflect the amount that is being paid out as dividend. Ex-dividend financial definition of ex-dividend https: Ex-dividend This literally means "without dividend.
It is the interval between the record date and the payment date during which the stock trades without its dividend-the buyer of a stock selling ex-dividend does not receive the recently declared dividend. Antithesis of cum dividend with dividend. The sale of a security after a dividend has been announced but before it has been distributed. When a security is sold ex-dividend, the dividend remains with the seller.
Selling ex-dividend almost invariably reduces the price for which the security is sold by the amount of the dividend.
Cum dividend , Ex-dividend date. Used to refer to a stock no longer carrying the right to the next dividend payment because the settlement date occurs after the record date. If, for example, GenCorp common stock goes ex-dividend on May 31, an investor purchasing the stock on or after that date will not receive the next dividend check.
A stock trading ex-dividend is indicated in stock transaction tables by the symbol x in the volume column. Case Study A stock's ex-dividend date should be of more interest to an investor than the dividend record date or dividend payment date. A stock must be purchased one day prior to the ex-dividend date for the buyer to claim a dividend that has been announced but not yet paid.
Buy shares of stock on the ex-dividend date and the seller, not you, will receive the upcoming dividend. The ex-dividend date is two business days prior to the record date because three days are required for regular settlement of a stock transaction.
Buy stock on Tuesday and you will be listed as the owner of record on Friday, the day that payment is required for the purchase. If a firm's directors have declared that a dividend will be paid to stockholders of record on Friday, you must buy the stock the stock on Tuesday in order to have a right to the dividend. In this case the ex-dividend date is Wednesday, two days prior to the record date.
Relevant dates for the stock of international petroleum giant BP are illustrated below.More...