Ex-Dividend Date

The ex-dividend date is the first trading day a stock trades without the right to its upcoming dividend. Buy the shares any time before the ex-date and you collect the payment; buy on the ex-date or later and the dividend goes to the seller.

The cutoff exists because of settlement timing. Under T+1, a purchase settles one business day later, and the record date — when the company checks its shareholder register — falls on the same day as the ex-date. The last cum-dividend purchase, made the day before the ex-date, settles on the ex-date itself and lands on the register just in time for the record-date snapshot; a purchase on the ex-date settles a day too late.

On the ex-date morning, the stock opens lower by roughly the dividend amount, all else equal, and exchanges adjust resting buy orders down accordingly. A $0.50 dividend does not create free money for anyone buying the day before; the price hands it right back.