ex-dividend

Ex-Dividend

The trading of shares when a declared dividend belongs to the seller rather than the buyer.

Notes:

A stock trades ex-dividend on or after the ex-dividend date (ex-date).

See also: Book Closure, Cum Dividend, Declaration Date, Dividend, Ex-Date, Holder of Record, Payment Date, Record Date

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Ex-dividend

This literally means "without dividend." The buyer of shares when they are quoted ex-dividend is not entitled to receive a declared 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).

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ex-dividend

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. Compare cum dividend.

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.

	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Announcement date	Feb 13	May 8	August 7	Nov 6
Ex-dividend date	Feb 21	May 16	August 15	Nov 14
Record date	Feb 23	May 18	August 17	Nov 16
Payment date	March 19	June 11	Sept 10	Dec 10

Notice that the record date follows the ex-dividend date by two business days for each quarterly dividend. In the first quarter you must have purchased the stock by February 20 to be listed as a stockholder on February 23 and receive the dividend on March 19. Purchasing the stock on February 21 meant you would not have been listed as a stockholder of record until February 24, one day beyond when the company determined who was to receive the dividend. A weekend or holiday between the ex-dividend and record dates lengthens the time difference to four days or three days, respectively. The schedule for BP indicates owners of the stock on the day prior to the ex-dividend date must wait nearly a month for actual payment of the dividend.