What is the ex-dividend date?

What is an ex-dividend date and why is it important to a dividend-focused investment portfolio?

How a company determines whether you should receive a dividend is by using two dates: ex-dividend and record. You’ll need to have shares held in a company by these stated dates in order to receive a dividend payment.

The record date is when the dividend payment is finalized to all registered shareholders. You need to have shares purchased prior to this date in order to receive a dividend. The ex-dividend date is simply one trading day prior to the record date.

You’ll find out what the two dates are when the company declares a dividend payment. Here’s how it works:

Declaration DateEx-Dividend DateRecord DatePayable Date

If you want to receive a slice of the dividend pie, you’ll need to have your shares purchased before the ex-dividend date. If you purchase shares on the day or after, the seller who sold you the shares will receive the dividend payment.

On 16/09/2020, your favorite company announces a dividend with a record date of 13/11/2020. The ex-dividend date would then be 12/11/2020. The payable date of 25/11/2020 is simply when the dividend would be paid out to shareholders.

If you buy a share on or after the ex-dividend date, the seller will receive the dividend payment. Likewise, if you sell a share on or after the ex-dividend date. So make sure you get your shares in before the ex-dividend date, else you’ll be reimbursing the seller the amount that should have lined your pocket.

By Rich Edmonds

Rich creates content for the top Windows-focused publication, but by night he tries to make his money work for him and rambles far too much here.

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