Existing shareholders of a company's stock receive notification, typically by mail, when the company declares a dividend payment. Included in the information, along with the amount of the dividend, the record date, and the payment date is the ex-dividend date. Investors who do not already own shares of a company's stock can find weekly listings of upcoming ex-dividend dates through financial and investment information websites, such as Barrons.com.
There are three important dates involved with the process of a company paying a dividend: the declaration date, the ex-dividend date, and the record date.
The Declaration Date
The declaration date is when a company's board of directors announces that the company will be paying a dividend. In the declaration, the company discloses the amount of the dividend and the ex-dividend, record, and payment dates. Companies often issue dividend declarations on a regular quarterly, semi-annual, or annual schedule. Dividend declarations often accompany earnings announcements.
Existing shareholders receive the declaration information directly from the company, usually by a notice in the mail. Investing information websites regularly publish upcoming ex-dividend dates, along with the amount of the dividend.
The Ex-Dividend Date
The ex-dividend date is the critical date that determines who qualifies to receive the dividend. To receive the dividend, investors must purchase the stock no later than the day before the ex-dividend date. Before trading begins on the ex-dividend date, the share price is reduced by the exchange in the amount of the dividend. Beyond that point, the stock is trading ex-, or without, the dividend. The ex-dividend date in the United States is one business day prior to the record date.
The Record Date
The record date is simply the date when the company officially records the stockholders who are eligible to receive the dividend – the shareholders who purchased the stock prior to the ex-dividend date.
The Payment Date
The final date associated with dividend payments is the payment date, the date when the company pays the dividend. The payment date typically follows the ex-dividend date by about a month.
FAQs
Existing shareholders of a company's stock receive notification, typically by mail, when the company declares a dividend payment. Included in the information, along with the amount of the dividend, the record date, and the payment date is the ex-dividend date.
How do you find dividend per share ex-date? ›
The ex-dividend date for stocks is usually set one business day before the record date. If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend.
How to calculate the dividend per share? ›
Using the Dividend Per Share (DPS) formula, we get: DPS = Dividend / Number of shares = ₹20 lakh / 5.5 lakh shares = ₹3.64 per share.
What is the ex-date for dividends? ›
The ex-dividend date or "ex-date" is usually one business day before the record date. Investors who purchase a stock on its ex-dividend date or after will not receive the next dividend payment. Instead, the seller gets the dividend. Investors only get dividends if they buy the stock before the ex-dividend date.
What is the ex-dividend date example? ›
Practical Example of Ex-Dividend Date
The company announced the dividend payment date to be June 10, 2018. The date of record for shareholders captured on the company's books is Monday, April 30, 2018. This means the ex-dividend date, one business day before the record date, will be Friday, April 27, 2018.
How many days before the ex-dividend date should I buy a stock? ›
As noted above, the ex-date or ex-dividend date marks the cutoff point for a pending stock dividend. Some trading platforms, market data, and news services might add an XD modifier to the ticker symbol to show it is trading ex-dividend. If you buy a stock one day before the ex-dividend, you will get the dividend.
Can I sell stock on ex-dividend date to get dividend? ›
Another important note to consider: as long as you purchase a stock prior to the ex-dividend date, you can then sell the stock any time on or after the ex-dividend date and still receive the dividend. A common misconception is that investors need to hold the stock through the record date or pay date.
How to check stock dividend? ›
Many stock brokerages offer their customers screening tools that help them find information on dividend-paying stocks. Investors can also find dividend information on the Security and Exchange Commission's website, through specialty providers, and through the stock exchanges themselves.
How do you calculate your dividend? ›
How do you calculate dividend yield?
- Find out how much dividends per share the company pays annually.
- Divide such an amount by the stock price. Multiply it by 100.
- There – you have your dividend yield in percent. Notice you can increase the yield by buying the stock at lower prices.
Dividend Formula:
Dividend = Divisor x Quotient + Remainder. It is just the reverse process of division. In the example above we first divided the dividend by divisor and subtracted the multiple with the dividend. That means, we first divided and then subtracted.
The formula is as follows:
- Annual Dividends = Dividend Payment Per Period * Dividend Frequency.
- Dividend Yield = Annual Dividends / Current Share Price.
- Dividend Yield = (Dividend Payment Per Period * Dividend Frequency) / Current Share Price.
Dividend Per Share = Earnings Per Share x Dividend Payout Ratio. Dividend Per Share = Total Dividends Paid / Shares Outstanding.
How do you calculate dividend value from stock? ›
How Does the Dividend Discount Method Work?
- DDM Formula:
- The Value of the Stock = (Expected Dividend per Share) / (Cost of Capital Equity – Dividend Growth Rate)
- OR.
- DDM stock valuation = CF / (r – g)
- $1.50 / (0.06 – 0.04) = $75 per share.
- $1.50 x (1 + .04) = $1.56.
- $1.56 / (0.06 – 0.04) = $78 per share.
The formula for calculating the dividend yield is equal to the dividend per share (DPS) divided by the current share price. For example, if a company is trading at $10.00 in the market and issues annual dividend per share (DPS) of $1.00, the company's dividend yield is equal to 10%.
How do I find dividend history? ›
Ticker pages on Dividend.com make this sort of stock dividend history analysis relatively easy and straightforward; simply search for a ticker using the search box at the top of the page, and scroll down to the Dividend Yield & Stock Price History and Dividend Payout History sections for a visual representation of its ...
Can you sell on ex-dividend date and still get dividend? ›
Another important note to consider: as long as you purchase a stock prior to the ex-dividend date, you can then sell the stock any time on or after the ex-dividend date and still receive the dividend. A common misconception is that investors need to hold the stock through the record date or pay date.
How long do you have to hold stock to get a dividend? ›
The company announces when the dividend will be paid, the amount and the ex-dividend date. Investors must have bought the stock at least two days before the official date of a dividend payment (the "date of record") in order to receive that payment. The company pays out the dividend to shareholders.
