Ex-Date
Candlefocus EditorThe Ex-Date, or Ex-Dividend Date, is the day before the Record Date when a company distributes its dividend to shareholders. On the ex-date, the stock of the company will no longer trade with the right to receive the pending dividend payment. That means, any shareholder who wishes to receive the dividend must own shares on or before the ex-date.
To understand how an ex-date works, let's look at an example. Suppose a company announces an upcoming dividend payment at the start of the month with an ex-date of June 10th. All shareholders who own shares in the company on the 10th will be eligible for the dividend. All other shareholders, however, will not be eligible to receive this dividend payment even if they bought the company’s shares after the ex-date.
It's also important to note that on the ex-date, the current share price of the company will adjust to exclude the value of the upcoming dividend. This means that the share price will decrease by the amount of the dividend. When combined with the right to receive the dividend, this can create an attractive investment opportunity for investors.
In summary, ex-dividends are a method of distributing dividends to shareholders. On the ex-date, the stock price typically adjusts by the amount of the dividend and shareholders who wish to receive the dividend must own the stock before the ex-date. Investors should always be aware of the ex-date when considering dividend stocks to ensure they don't miss out on the upcoming dividend payments.