Dividends
Ex-Dividend Date
The ex-dividend date is the first day a stock trades without the right to the next declared dividend.
Companies declare a dividend, name a record date, and the exchange sets an ex-dividend date, usually one business day before the record date. If you buy on the ex-date, you do not get that payment. The price often drops by roughly the dividend amount that morning, before any other news, because the cash is leaving the company.
Buying solely to capture a dividend and selling the next day is not a free lunch. The price drop, taxes, and spreads eat the coupon. Use the ex-date to know when you become entitled, and to understand a one-day price gap that is not a crash.
Formula
Buy before the ex-dividend date to receive the declared dividend; buy on or after it and the seller receives it.
Live example
Apple Inc. (AAPL) last printed at $345.65 with a market cap of $5.04T. This quote has no dividend yield, which is itself the example: yield is blank when no dividend is being capitalized.
Related
Dividend Yield · Payout Ratio · Dividend Growth
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Questions
Does the price always fall by the dividend?
Roughly, on the open, before other news. A rally or a selloff the same day can hide it. Over a year the dividend is a real cash return, not a daily trick.
What is the record date?
The record date is when the company checks its register. Because of settlement, the ex-date is the market's practical cutoff and the date that matters for a trade.