Ex-dividend date

The ex-dividend date (abbrev xd or ex-div) is the first date when buying a stock does not entitle the new buyer to the declared dividend, as the transfer of stock ownership cannot be completed before the company initiates dividend payment. Before this date, the stock trades cum-dividend.

With every dividend declaration, the company also announces an associated record date and a payment date. The record date is when the company initiates the payments to shareholders of record; the payment date is when the company expects the payment process to complete. Sometimes the difference between the two dates can be substantial.

Different countries and their stock depositories have different processing cycles for transfer of stock ownership. In the US, the standard process takes three business days (T+3) unless negotiated otherwise between the buyer and the seller. Thus, the ex-dividend date is set at two business days prior to the record date.

As an example, consider the following announcement from Du Pont on July 29, 2009: "DuPont declared a third quarter common stock dividend of 41 cents per share, payable September 11, to stockholders of record August 14. ...". The ex-div date for this dividend was set to August 12.

Usually the stock's price will drop by the amount of the dividend on the ex-dividend day (ceteris paribus) since that much wealth has already been transferred by the company to its owners.

External links

• Dissecting Declarations, Ex-Dividends, and Record Dates on Investopedia.com
• Ex-Dividend Dates: When Are You Entitled to Stock and Cash Dividends by the U.S. Securities and Exchange Commission
• Ex-Dividend Dates Notice to members of the National Association of Securities Dealers, Inc. (NASD)
• List of upcoming ex-dividend US stocks on dividata.com