What does ex-dividend mean?

Ex means without. A share bought before the ex-date comes with the next dividend, and a share bought on or after it comes without. Companies and exchanges publish the date, and most brokers show it on the stock’s page.

Ex-dividend date (ex-date)
The first trading day on which a stock no longer carries the right to its next dividend. Someone who buys on or after this day does not receive that dividend.
Record date
The day a company checks its register of shareholders to decide who is paid. In the US it is normally the same business day as the ex-date.
Payment date
The day the dividend is actually paid to those entitled to it, often some weeks after the record date.

Ex-dividend date vs record date vs payment date

Since May 28, 2024, US stock trades settle one business day after the trade (T+1), and you join the company’s register when your trade settles. A purchase on the business day before the record date settles on the record date, so it is the last purchase that qualifies. That is why the ex-date and the record date are now normally the same business day, as in the drawing at the top of the page. Older guides that put the ex-date one day before the record date describe the two-day settlement used until then. A hypothetical calendar:

  1. Declaration date: the board announces a dividend of $0.40 per share and sets the dates.
  2. Monday, the last day to buy: own XYZ at the close and you qualify.
  3. Tuesday, the ex-date and record date: the stock trades without the dividend, and the company reads its register.
  4. Payment date, often weeks later: the cash reaches your brokerage account, even if you have sold by then.

Who gets the dividend if you buy or sell around the ex-date?

One test decides it: did you own the shares at the close of the last trading day before the ex-date? When you sell after that does not matter. With the ex-date on a Tuesday, as in the drawing below:

  • You bought last week and still hold: you get the dividend.
  • You buy on Monday and sell on Tuesday: you get it, because you owned the shares at Monday’s close.
  • You have held for years and sell on Monday: you do not get it, and the dividend goes to the buyer.
  • You buy on Tuesday: you do not get it, and the dividend goes to the seller.

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A table for an ex-date and record date on Tuesday, with two columns, owns at Monday’s close and dividend: bought last week, still holds, a check in both; buys Monday, sells Tuesday, a check in both; held for years, sells Monday, a cross in both; buys Tuesday, the ex-date, a cross in both. A note reads one test only: do you own it at the close before the ex-date?

Why does the stock price drop on the ex-dividend date?

A company that is about to pay out cash is worth that much less. Hypothetical: XYZ closes on Monday at $40.00 and pays $0.40, so, all else equal, it opens on Tuesday around $39.60. If you hold 100 shares, you had $4,000 of stock on Monday. On Tuesday you have $3,960 of stock and $40 of dividend to come, still $4,000. Before tax, nothing was gained or lost; the value only moved from the shares to cash.

In practice the adjustment is rough, because the market moves for other reasons that day. A small gap down on an ex-date is not a bearish signal, and many chart platforms can adjust past prices for dividends, which is why two charts may show different old prices. Brokers may also adjust or cancel open orders around the ex-date, so check any you have working.

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Daily candles closing at $40.00 under a dashed prior-close line, then a candle opening at $39.60, marked −$0.40. Two cards: Monday’s close, 100 × $40.00 = $4,000; Tuesday’s open, 100 × $39.60 = $3,960, plus $40 of dividend to come, total $4,000. A note reads value moved from the shares into cash: before tax, no gain and no loss.

Does dividend capture work? The free-money myth

Dividend capture means buying just before the ex-date, collecting the dividend and selling soon after. It looks like free money until you add it up. In the drawing below, you buy 100 shares of hypothetical XYZ at $40.00 and sell at the $39.60 open: the price drop costs $40, the dividend pays $40, 30% is withheld at the default rate for non-US investors (−$12), and an assumed $2 of spread and fees leaves you at −$14.

US taxpayers do not get a clean result either: a dividend on shares held only briefly is generally taxed as ordinary income, because the lower qualified rate requires holding for more than 60 days during the 121-day period that begins 60 days before the ex-date. Some stocks regain the drop quickly and others do not, and that recovery is ordinary market movement, with the same risk as any other purchase. If you want dividend income, the decision belongs with the company and its valuation; see dividend investing.

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A waterfall for 100 hypothetical XYZ shares bought at $40.00 and sold at the $39.60 open: price falls −$40, dividend +$40, tax withheld −$12, costs −$2, and a hatched result bar of −$14. A note reads the dividend replaces the price drop, then tax and costs come out.

When is the ex-date different? Special dividends and other markets

Large special dividends follow another rule. When a dividend is 25% or more of the share price, the US ex-date is set after the payment date, normally the next business day, and shares sold in between carry the right to the dividend with them. Always read the announcement for an unusually large payment.

Outside the US, the gap depends on settlement. Where trades still settle in two days, as on the main European markets in 2026, the ex-date usually falls one business day before the record date. In France, the ex-date is often called the date de détachement. In Saudi Exchange announcements, the Arabic entitlement date usually means the day you must own the shares at the close, as how dividends work explains. Use the calendar published by the company, the exchange or your broker.