Dividends & Funds

Ex-Dividend Date Explained: When to Buy a Stock to Get the Dividend

By USWealth Editorial Team··1 min read
Ex-Dividend Date Explained: When to Buy a Stock to Get the Dividend

To receive a dividend, you need to own the stock before the ex-dividend date. Here's how the key dividend dates work.

The ex-dividend date determines who receives a stock's next dividend. If you buy before the ex-dividend date, you get the dividend. If you buy on or after it, the seller gets it.

The Four Key Dates

  1. Declaration date: the board announces the dividend.
  2. Ex-dividend date: the cut-off for new buyers.
  3. Record date: the company identifies shareholders of record. With T+1 settlement, this is generally the same day as the ex-date.
  4. Payment date: the dividend is paid.

Why the Price Drops

On the ex-dividend date, a stock's price typically falls by about the dividend amount, because new buyers no longer receive it. So buying just before the ex-date to "capture" the dividend isn't free money — and may create a tax bill. See how dividends are taxed.

Calendar and financial planning
Calendar and financial planning

Practical Tips

  • Long-term investors don't need to time purchases around ex-dates.
  • To keep dividends "qualified," meet the holding period rules.
  • Use a DRIP to reinvest automatically.

Frequently Asked Questions

If I sell on the ex-dividend date, do I get the dividend?
Yes. If you owned the shares before the ex-date, you receive the dividend even if you sell on the ex-date.
Where can I find ex-dividend dates?
Company investor relations sites and most brokerage platforms list upcoming dividend dates.
Does dividend capture work?
Usually not, because the price drop and taxes offset much of the benefit.
Note: This article is for educational purposes only and is not investment advice. See our Disclaimer.
#Ex-Dividend Date#Record Date#Dividends#T+1 Settlement

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