Dividend dates explained: declaration, ex-dividend, record and payment dates
To receive a dividend you must own the stock before the ex-dividend date. Under T+1 settlement the ex-date now usually falls on the record date itself.
Key takeaways
- Every cash dividend has four key dates, declaration, ex-dividend, record and payment, and the ex-dividend date is the one that decides who gets paid.
- Since US stocks moved to T+1 settlement on May 28, 2024, the ex-dividend date for a normal dividend is the same business day as the record date, not one business day earlier.
- To receive the dividend you must buy the shares before the ex-dividend date; buyers on or after the ex-date do not get it, and sellers on the ex-date still do.
- For unusually large distributions of 25% or more of the stock's value, the ex-date is set to the first business day after the payment date instead.
- On the ex-date the share price typically opens lower by roughly the dividend amount, because new buyers no longer receive the payment.
To receive a stock's dividend, you must buy the shares before the ex-dividend date; if you buy on or after the ex-date, the seller keeps the dividend. Since the US moved to T+1 settlement in May 2024, the ex-dividend date for a regular cash dividend falls on the same business day as the record date. The other two dates, declaration and payment, tell you when the dividend was announced and when the cash actually arrives.
The four dividend dates
| Date | What it is | Who sets it | What it means for you |
|---|---|---|---|
| Declaration date | The day the board announces the dividend, amount and dates | Board of directors | The dividend is now official |
| Ex-dividend date | First trading day the stock trades without the right to the upcoming dividend | Exchange or FINRA, based on the record date | Buy before this date to receive it |
| Record date | The day the company checks its shareholder records to see who is owed the dividend | Board of directors | You must be a holder of record (settled) by this date |
| Payment date | The day the dividend is paid | Board of directors | Cash (or shares) lands in your account |
Declaration date
The declaration date (also called the announcement date) is when the board formally approves the dividend. The announcement typically states the amount per share, the record date and the payment date. Many companies publish it in a press release, and changes to dividend policy are sometimes reported on Form 8-K under Item 8.01 (Other Events).
Ex-dividend date
The ex-dividend date (ex-date) is the first day the stock trades "ex," meaning without the right to the declared dividend. If you buy on the ex-date or later, you are not entitled to the payment. If you sell on the ex-date or later, you still receive it, because you owned the shares going into that day.
Record date
The record date is when the company, through its transfer agent, determines which shareholders are on its books and therefore entitled to the dividend. Because a trade only makes you a holder of record when it settles, the ex-date is set to line up with settlement.
Payment date
The payment date (payable date) is when the dividend is actually distributed. It can be days or several weeks after the record date.
Why T+1 changed the ex-dividend date
Settlement is the moment a trade becomes final: the buyer receives the shares and the seller receives the cash. On May 28, 2024, the standard settlement cycle for most US securities trades shortened from two business days (T+2) to one business day (T+1).
Under T+2, a buyer needed to purchase two business days before the record date to settle in time, so the ex-date was one business day before the record date. Under T+1, a purchase made the business day before the record date settles on the record date, so the ex-date and the record date are now the same day. FINRA updated its Uniform Practice Code (Rule 11140) for this change; see FINRA Rule 11140 and the SEC investor bulletin on ex-dividend dates.
| Settlement cycle | Ex-date relative to record date | Last day to buy and receive the dividend |
|---|---|---|
| T+2 (before May 28, 2024) | One business day before the record date | Two business days before the record date |
| T+1 (current) | Same business day as the record date | One business day before the record date |
If the record date falls on a day that is not a business day, the ex-date moves to the business day before it.
Large and special dividends: the 25% exception
The same-day rule applies to normal cash dividends and to stock dividends of less than 25% of the security's value. For distributions of 25% or more of the value of the stock (a very large special dividend, for example), FINRA sets the ex-date as the first business day after the payable date. Until then, buyers trade with a "due bill" attached, which entitles them to the distribution. This avoids a situation where a buyer pays the full pre-dividend price and the seller walks away with a large payout.
The same logic applies to large stock splits, which is why the split-adjusted price often appears the day after the new shares are distributed. See stock splits and corporate actions.
What happens to the stock price on the ex-date?
On the ex-dividend date, the stock's opening reference price is typically reduced by about the amount of the dividend. A stock that closed at $50.00 the day before going ex a $0.50 dividend would open around $49.50, all else being equal. The company paid out cash, so the shares are worth correspondingly less.
This is why buying a stock right before the ex-date just to collect the dividend (sometimes called dividend capture) does not produce free money: the price drop roughly offsets the payment, and in a taxable account the dividend may be taxed while the price drop is only an unrealized loss. Markets move for many other reasons the same day, so the actual change will rarely equal the dividend exactly.
Worked example: Acme Corp (ticker ACME)
On Tuesday, February 3, hypothetical Acme Corp declares a quarterly dividend of $0.40 per share, payable Friday, March 6, to shareholders of record on Friday, February 20.
| Date | Event |
|---|---|
| Tuesday, Feb 3 | Declaration date: dividend announced |
| Thursday, Feb 19 | Last day to buy and still receive the dividend (settles Feb 20 under T+1) |
| Friday, Feb 20 | Ex-dividend date and record date (same day under T+1) |
| Friday, Mar 6 | Payment date: $0.40 per share paid |
Three investors:
- Ana buys 100 shares on Thursday, February 19. Her trade settles on February 20, so she is a holder of record and receives $40.
- Ben buys 100 shares on Friday, February 20, the ex-date. He does not receive the dividend. The seller does.
- Cara owned shares for a year and sells on Friday, February 20. She still receives the dividend, because she held the shares going into the ex-date.
If Acme closed at $40.00 on February 19, it would open around $39.60 on February 20, before any other news moves it.
Key dividend terms
- Dividend yield: annual dividends per share divided by share price. A $1.60 annual dividend on a $40 stock is a 4% yield.
- Payout ratio: dividends divided by earnings (or by free cash flow). A ratio above 100% means the company is paying out more than it earns.
- Special dividend: a one-time payment outside the regular schedule, often after an asset sale or a period of strong cash generation.
- Dividend cut or suspension: a reduction or halt in the payout, frequently a sign of financial stress and often a large price catalyst.
- DRIP: a dividend reinvestment plan that uses the cash to buy more shares automatically, often including fractional shares.
Taxes: the qualified dividend holding period
In the US, qualified dividends are taxed at long-term capital gains rates, which are lower than ordinary income rates for most taxpayers. To qualify, you generally must hold common stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. A dividend capture trade held only a few days will usually not meet that test. Tax situations vary, so the IRS rules and a tax professional are the right references for your own case.
How to track dividends on Quantisnow
- The dividend calendar lists upcoming ex-dates, record dates and payment dates, and each company has a dividend history page following the pattern /dividends/KO.
- The dividends category streams dividend declarations, increases, cuts and special dividends as they publish.
- Use alerts on followed tickers so you see a declaration well before the ex-date.
- The market calendars docs explain how dates on the calendar are shown.
FAQ
What is the ex-dividend date?
The ex-dividend date is the first trading day a stock trades without the right to its next declared dividend. You must buy before the ex-date to receive the payment; buyers on or after it do not.
Is the ex-dividend date the same as the record date?
For normal cash dividends in the US, yes. Since the move to T+1 settlement on May 28, 2024, the ex-date is the same business day as the record date, because a trade made the day before settles on the record date.
If I sell on the ex-dividend date, do I still get the dividend?
Yes. If you owned the shares at the start of the ex-date, you are entitled to the dividend even if you sell that day. The buyer is not entitled to it.
Why does a stock drop on the ex-dividend date?
The company is about to pay out cash that new buyers will not receive, so the share price typically opens lower by roughly the dividend amount. Other market moves that day can mask or exaggerate the drop.
How are ex-dates set for very large special dividends?
For distributions worth 25% or more of the stock's value, the ex-date is the first business day after the payment date under FINRA rules. Shares sold before then carry a due bill that passes the distribution to the buyer.