What happens when a stock goes ex-dividend？

Although the stock is ex-dividend, dividends to be paid at the time of trading are not included in the。The owner of the stock the day before the ex-dividend date will be ex-dividend, regardless of whether they still own the stock at the time of payment.。

Since the value of the dividend distribution is not transferred when the dividend is ex-dividend, the stock price usually falls by the amount of the dividend on the day of the ex-dividend.。Falling stock prices should not be confused with signs of changes in a company's value and should be taken into account when comparing value indicators such as the price-to-earnings ratio (P / E ratio)。

Significant dates related to dividends

Some important dates relate to the Company's dividend payments。They include:

The declaration date is the date on which the company declares the dividend distribution by press release.。The company's board will decide to pay the dividend days or weeks in advance, and the announcement date is the first day the public learns of the upcoming distribution.。

The payment date is the date on which dividends are distributed to shareholders.。This date is provided on the declaration date so that the trader knows when the payment will reach their account。

The record date is the date on which a company closes its books to determine who is entitled to a pending dividend。Anyone who owns shares on this date will receive a payment per share as shown in the company's records。

The ex-dividend date is the first trading day on which any stock transaction no longer includes a pending dividend, and no person who purchases shares on or after the ex-dividend date will receive an impending payment。

Can I get a dividend on the day of the ex-dividend date?？

You will not receive a dividend on the ex-dividend date。Two important dates are provided when a company declares a dividend distribution - the payment date is the date on which you receive the dividend。But the company also gave a record date of one or two weeks prior to the payment date; only shareholders registered on the record date receive dividends。

The ex-dividend date is at least one business day earlier than the record date, giving the company time to update the record。

Do you still get dividends from selling shares on ex-dividend days?？

Yes, any transaction on or after the ex-dividend date will exclude outstanding dividends。When a payment is allocated, you are still the owner of the record in the company's books。So if you sell shares on ex-dividend day, you can still get a dividend after about two weeks。

Let's say you own 100 shares of common stock in a fictitious XYZ company that trades at $50 per share。The company announced a distribution of 0 per share..$50 dividend with a March 15 payment date and an ex-dividend date of March 1。

If you sell the stock before March 1, you will receive a $5,000 sale gain, but the new owner will receive a dividend on March 15.。However, if you sell the stock on March 1 (or any day thereafter), you may receive a reduction in the value of the stock (which may be $4,950), but you will still receive a $50 dividend check on March 15.。

If you sell the shares the day before the ex-dividend date, you also sell the right to receive the dividend to the new owner。

HOW LONG TO HOLD A STOCK TO GET A DIVIDEND？

Common stock does not have a vesting period of any type。A person listed as a shareholder on the registration date (the date the company checks its ownership records) will receive a dividend。Logically, this means that you must hold the stock for about two weeks before the payment date, but this is only because of the timing of the distribution of funds to shareholders。

The record date is usually two weeks before the payment date。Since the transaction must be cleared before the record date, you must usually start the purchase at least a few days before the record date。

What is the ex-dividend day?？

Each company will provide a different dividend payment date and ownership record lock-in time, and some companies also provide that the transaction becomes an ex-dividend date (the new owner is not entitled to the dividend)。

The registration date is usually about two weeks before the payment date, and the ex-dividend date is usually one to two business days before the registration date (depending on exchange rules)。

Most companies tend to pay a quarterly dividend。They are usually announced after quarterly board meetings and distributed about 4-6 weeks later.。Although each company is different, you can estimate the next dividend payment by adding three months to the previous dividend payment。

But keep in mind that not all companies distribute earnings to shareholders。Growing companies are less likely to pay dividends because their profits are reinvested into the company。Mature firms are more likely to distribute earnings to shareholders, in addition, firms with a history of paying dividends are more likely to continue to do so。

Are stocks always ex-dividend?？

Under normal circumstances, dividend shares are always ex-dividend at least one business day before the record date (the date the company determines who will receive the distribution) (the purchase of shares does not include dividends to be paid)。

However, since a company's share price usually falls by an amount equivalent to a dividend immediately after ex-dividend, large distributions can cause problems in the stock market。As a result, most stock exchange rules provide for exceptions when the dividend amount is 25% or more of the share price。In this case, the stock is a dividend (including dividends) until it is paid.。

In other cases, the company may offer dividends on additional shares of the company's stock instead of cash dividends。In this case, it doesn't make much sense to allocate shares to someone who has just expressed a desire to stop investing in the company。As a result, stock dividends are usually not ex-dividend until the stock is distributed。This means that if you sell shares after declaring a stock dividend, you will sell the current shares and the dividends you plan to receive。