Ex-Dividend Date & Record Date Explained

Ex-dividend date has caused a lot of confusion for many stock market investors. I have an easy method to remember this and other important dates.

The plain definition of the ex-dividend date is that this is the cut off date by which you need to already have purchased the company's shares in order to receive the up coming dividend.

So, you need to buy the stock shares at least one business day before the ex-date in order to receive your payment. If you buy the stocks on or after the date, the seller will receive the dividend.

To put this in context, we have to look at all the dates and not just the ex-dividend date. The other dates are: the declaration date, record date, and pay date. It's also good to know the payment amount and frequency, meaning is the dividend paid out quarterly, monthly or annually.

Let's look at the declaration date. This is the date the board of directors, who are voted in by the shareholders, declare the dividend payment amount and set the payment date, record date, and ex-dividend date.

A large well established company is able to generate a yearly increasing net profit. This increase in yearly profit also allows the board of directors to declare an increase in dividends, which is highly important if you want your money to retain its buying power.

While in their meeting, they also discuss the record date. This is the date used to check and see which shareholders are in the company's books to receive the dividend payments. The ex-dividend date is typically set two business days before the record date.

If you've bought stocks before, you know it takes 3 business days to process the order and update the books.

That's why you should buy the shares at least one business day before the ex-dividend date. This time allows the system to update the books in order for you to receive your dividend.

The payment date is, of course the date you will receive your dividend. Depending on which broker you use, you will possibly see your dividend posted into your cash account on the next business day.

[MelindaMatsuda]

I feel investors should focus on under-the-radar stocks, considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises plummeting stocks that were once revered. I don't know where to go here out of devastation.

[addiebrown]

If you buy after the ex dividend date, will that apply to the next declaration? Meaning if you have 10 shares and bought 2 shares after the ex date and only got paid for 10. Will the next declaration date/ex date pay you for the 12 you own?

[reezyfeel]

Thank you for the tortilla n and making it easier ❤️ now i really understand the dividend dates ❤

[abelskariah]

Can we sell the stocks before the record date and still receive dividends?