When is the Dividend Ex Date?

If you are starting to invest in dividend paying stocks, then you are finally starting to see some dividends. You should see them coming in on a monthly basis if you have chosen to invest in stocks that pay dividends monthly. However, most stocks will pay out distributions on a quarterly or semi-annual basis. If you have decided to stagger your dividend payments, you can effectively create a dividend portfolio that will pay each month. There are even stocks that only pay dividends once a year. That is why it is important to know when the pay date is for your dividends and when the dividend ex date is. You need to know if you are getting a dividend, when you have to purchase the stock to get the dividend and when you will receive the cash from a dividend in addition to information about the dividend yield formula that many investors focus too much on.

What is a Dividend Ex Date?

There are three important dates to know when you are looking at the dividend schedule of a stock; the declaration date, the ex-date and the payable date. There is also a record date but it is not as important. There are investors that only focus on the payable date and do not even know what the ex-date is. You might have noticed that right before a dividend is paid a stock price will begin to inch up. That is because there are investors that buy the stock just for the dividend and dump it right after instead of participating in passive dividend income. They are timing the dividend dates just to get the distribution and once they have it, they will sell the stock. After the dividend is paid, you will usually see the stock price drop back to around where it was before the dividend was paid. Here is an explanation of what happens.

  • The Declaration Date: The company will declare that they are paying a dividend and file the appropriate paperwork with the details.

Traders will begin to purchase the stock. Traders that do not know what they are doing will keep buying the stock through the ex date right up until the payable date.

  • The Ex Date: This is the date where the stock trades without the dividend, hence the name ex-dividend date.
  • The Record Date: The company will take a count of all investors who were holding the stock before this date and count them as eligible to receive the previously declared dividend.

Experienced traders will dump the stock after the ex-date and the price will drop slightly, usually in the amount of what the dividend was. Inexperienced traders will hold the stock until the payable date with their dividend stock investing, thinking that they have to have the stock until then to get the dividend.

  • The Payable Date: The company will pay the declared dividend to investors who were holding the stock before the ex-date and the cycle will continue at the next declaration date.

Did you get that? The ex-date is the most important date in terms of deciding whether you will receive the dividend or not. The second most important date is the payable date, so that you know when you are receiving a dividend. But the declaration date is also important so that you know if a dividend will be paid at all.

 Dividend Ex-Date Example

This is a shot from Morningstar that lists the dividend information for a large company. As you can see they declared their dividend in July. The ex-date was not until August. And if you click on performance, then dividends and splits, you will see that the payable date is in September. So if you had purchased this stock, in order to get the dividend, you will need to purchase before the 26th of August. You are free to sell on August 26th or after and you will still receive the cash dividend in September.

Quick note: Some dividends are paid in a mix of cash and stock and some are only stock. I have a few fractional shares from a dividend payment because I forgot to look at the ex-date.

Have you been paying attention to the dividend ex-date?

22 thoughts on “When is the Dividend Ex Date?

  1. I wish I had this article available a year or so ago, when I was trying to figure all this out. I was able to find it but this would have put everything all in one spot. Very well done!

    1. It is the simple things like this that most investors look over when they start buying dividend stocks. I remember when I worked for a popular discount brokerage that we had a customer that used to call each quarter asking for his dividend. We had to keep explaining that the declared date is not the payable date and the ex-date is not the payable date.

  2. You talk about Experienced Traders vs. Inexperienced traders in terms of dumping and picking up the stock…but what about those of us where the date doesn’t matter! I want to hold the stock for YEARS to come.

    1. That’s true, but when you first buy a dividend stock, you will still want to look at the dividend dates. Let’s say your stock doubled in value, would you sell half and take out the initial investment? You might want to take it out after the ex-date if you still want the dividend.

  3. Most of my dividend stocks are in my ROTH and I am not planning to sell them. But we do have some outside of ROTH. Even those are mostly not for selling in the short term, but if we do this will be a great help. Thanks.

  4. If you are investing in any stock that pays dividends, then it is important to take care of some key and important dates as these dates helps in increasing return from the stock as these dates decides the dividend payment. So as an investor you must take care of ex dividend date.

  5. Also keep in mind that although you may purchase a stock on or before the EX-Div date some institutions only “confirm” the purchase several days after the disbursement of funds to purchase. This can lead to purchasing a stock the day before ex-div but the purchase is only confirmed the day after.
    I wonder who gets the dividend in that case as the seller sold prior to ex-div and the purchaser is confirmed after ex-div? Maybe the banks are skimming the dividends? I wouldn’t know. I just make sure I purchase at least 4 days prior to ex-div.

    1. Good point. Though you should see a verification of your ‘trade execution date’. If you purchased but the trade didn’t settle until 3 days later, you should still be ok.
      The dividend still gets paid to whomever is holding the stock. So if you sold before the ex-div date, you had to sell to someone. Either your broker owns the stock or another individual purchased. It could also belong the the market maker. They make the money on the price (spread) between the buy and sell price and they own lots of shares.

      1. Well I just purchased some shares on Sept 23rd with an ex-div of Sept 28th, record date of Sept 30th and pay date of Oct 20th.
        Received the broker statement today, Oct 3rd, for the transaction showing the “settlement” date of Sept 28th. So I should get the dividend.
        The is a time lapse of 3-4 days between the actual purchase/fund disbursement for the shares and the settlement date. You will probably not get the dividend if the settlement is past the “EX” date. Someone else will be having a lunch at your expense. Something to keep in mind if you are looking to get in under the “EX” date cut off. You might just as well wait anothe rmonth to see if something else pops up, like a market slide.

  6. You’d be surprised to find out just how many wannabe traders and investors confuse dividend ex date! Didn’t we all had trouble when starting out our investing career?

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