- An investor must buy a stock before the ex-date to collect a dividend.
- The seller receives the dividends if the new investor buys stock on or after the ex-date.
- Dividend Reinvestment must be turned on before the ex-date to have the dividend automatically reinvested.
Timing is everything, as they say! To get a dividend, you have to own the stock ahead of time, before the dividend is actually paid out. That magic date is called the “ex-dividend date.” Pros call it the “ex-date.”
So how do you know when the ex-date is? When a company announces a dividend, it also announces two dates: the record date and the payable date. The stock exchange sets the ex-date – usually two business days before the record date. The payable date is when the company pays out the dividend, which can be days, weeks, or even a month after the ex-date. Here is a helpful calendar so that you can see what we mean:
For example, if you buy some Apple stock before the ex-date, you get the dividend. If you buy it on or after the ex-date, the seller gets the dividend, even if you now own the stock.