Dating an ex

24-Aug-2020 20:35

Investors need to buy a dividend-paying stock at least one day before the record date, since trades take a day to settle.

dating an ex-38

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Since the payment date is known in advance, the event shouldn't have any impact on the stock's price.

When a trade occurs, the record of that transaction isn't settled for one business day. Thus, if an investor owned the stock on April 7 but sold the stock on April 8, they would still be the shareholder of record on April 11 because the trade hasn't fully settled.

However, if the investor had sold the stock on April 7, then the trade would have settled by April 11, and the new buyer would be entitled to the dividend.

For example, if a company declared a dividend on March 3 with a record date on Monday, April 11, the ex-date would be Friday, April 8, because that is one business day before the ex-date.

The ex-date occurs before the record date because of the way stock trades are settled.

This is an important date, as any change in the expected dividend payment can cause the stock to rise or fall quickly as traders adjust to new expectations.