Ex-dividend date

The date from which a share trades without the right to receive the next declared dividend. Buy on or after it and the payment goes to the seller.

Example

A share paying 1.00 typically opens roughly 1.00 lower on its ex-dividend morning, all else equal.

Important

The price drop on this date is not a loss. Value moves from inside the company to your account, which is why a dividend is never free money.

Related terms

• Dividend — A distribution of cash (occasionally shares) from a company to its shareholders, declared at the discretion of the board out of the company's available profits.
• Total return — The complete return from holding an asset over a period: the change in price plus every distribution received, expressed against the amount invested.
• Payout ratio — The share of earnings paid out as dividends. What remains is retained and reinvested in the business.

Lessons that explain it

• Where an equity return comes from: cash paid out, and cash kept in — Two sources, one pool. A company either hands you cash or reinvests it on your behalf - and a company that reinvests is not withholding your return. (11 min)

All 578 terms in the Investing glossary