Ex-Dividend Date and Record Date, Fully Explained
— the Exact Timing to Receive a Dividend
How late can you buy a stock and still get the dividend? We fully explain the difference between the 4 key dates — declaration date, ex-dividend date, record date, and payment date — and the exact buy timing you need.
Defining the 4 Dates
- Declaration Date: the day the board officially declares the dividend payment. The amount, record date, and payment date all get announced together.
- Ex-Dividend Date: shareholders who buy after this date don't get the dividend. This is the key date — you have to buy by the day before it to receive the dividend.
- Record Date: the day the company finalizes the list of shareholders entitled to the dividend. Since the US shifted to T+1 settlement in May 2024, this is now the same day as the ex-dividend date (under the old T+2 system, it was the next business day after the ex-dividend date).
- Payment Date: the day the dividend actually lands in your account. Anywhere from a few weeks to a few months after the declaration date.
US Stock Settlement and Buy Timing
US stocks settle on T+1 (the next business day after the trade). So to be registered as a shareholder on the record date, you need to buy and have it fill before the market close the business day before the ex-dividend date.
- If the ex-dividend date is Thursday → buy before Wednesday's market close
- Buy on the ex-dividend date itself → not registered as a shareholder on the record date → no dividend
The Price Drop After Going Ex-Dividend
On the ex-dividend date, the price theoretically drops by exactly the dividend amount. For example, if the dividend is $1, the theoretical price after going ex-dividend is $1 lower. In practice it moves differently depending on market supply and demand, but a "dividend-chasing" short-term trade can lose money to this drop.
The Risk of Short-Term Dividend Chasing
Buying right before the ex-dividend date, collecting the dividend, and selling right after going ex-dividend is theoretically a neutral strategy, because the price falls by exactly the dividend amount. Add on taxes (a 15.4% dividend income tax) and trading fees, and short-term dividend chasing often ends up a net loss.
Frequently Asked Questions
What is the ex-dividend date?
If I buy the day before the ex-dividend date, do I get the dividend?
Why does the price fall on the ex-dividend date?
How do I check the ex-dividend date on DawnScan?
Sources
- DTCC — US T+1 Settlement Transition — official material from the US clearing/settlement operator on the May 2024 T+1 move; background for the record-date = ex-date rule
- SEC Investor.gov — Ex-Dividend Date glossary — definition of the ex-dividend date
- SEC Investor.gov — Settlement Date glossary — definition of settlement date (T+1: settles the next business day after purchase)