Ex-Dividend Date
The ex-dividend date is the first trading day on which a stock trades without the right to its next dividend payment.
The ex-dividend date determines who gets the next dividend. If you buy a stock before the ex-dividend date, you receive the upcoming dividend. If you buy on or after the ex-dividend date, the seller gets it instead.
The date is linked to the record date, the day a company checks its list of shareholders. Because US stock trades now settle one business day after the trade, the ex-dividend date is generally the same day as the record date. Buying on the ex-date means your purchase settles too late to put you on the list.
On the ex-dividend date, the stock price usually opens lower by about the amount of the dividend, because the cash is leaving the company. This means buying a stock just before the ex-date to capture the dividend is generally not a free lunch: the price drop offsets the payment, and taxes may apply.
Example: a stock trading at $50 declares a $1 dividend with an ex-dividend date of Thursday. Buyers through Wednesday receive the dividend. On Thursday, the stock might open around $49, all else being equal.