Ex-dividend date explained (with the 2024 T+1 rule)

The short answer

The ex-dividend date is the first trading day a stock trades without its upcoming dividend. To get the dividend, you need to own the shares before the ex-dividend date. Buying on the ex-date or later means the seller keeps that payment.

The four dates, in order

What changed in 2024: T+1 settlement

On May 28, 2024, US stock trades moved from "T+2" to T+1 settlement (SEC final rule): a trade now officially settles one business day after you make it, instead of two. That changed the dividend calendar.

• Before: the ex-dividend date was one business day before the record date.
• Now: for regular dividends, the ex-dividend date and the record date are usually the same day.

Plenty of older articles still describe the old rule, which is why you'll see conflicting explanations online. If an article says "the ex-date is two days before the record date", it was written before T+1 (and probably before T+2, too).

A real-life style example

A company declares a $0.60 quarterly dividend. Here's how the calendar plays out:

Weekends and market holidays don't count as trading days, so if the ex-date is a Monday, your last day to buy is the Friday before.

Why the price drops on the ex-dividend date

On the ex-date the company is about to send cash out the door, so each share is worth roughly that much less. Exchanges reflect this by adjusting the reference price down by about the dividend amount. A $50 stock paying a $0.60 dividend will tend to open around $49.40, all else being equal. On any given day normal market moves can swamp that, so you won't always see it. But over many dividends it's there.

The dividend-capture myth

The idea: buy right before the ex-date, collect the dividend, sell right after. Free money? Not really, for three reasons:

1. The price drop roughly cancels the dividend. You receive $0.60 but your shares are worth about $0.60 less.
2. Taxes get worse, not better. Hold for less than the required period and the dividend becomes non-qualified, taxed at ordinary income rates instead of 0/15/20%. See the holding-period rule in our dividend tax guide.
3. Trading costs and risk. Spreads, plus whatever the market does while you hold, can easily wipe out a small dividend.

For long-term investors, the ex-date mainly matters in two cases: when you're buying a new position and want this quarter's dividend, or when you're selling and want to make sure you collect it first.

Special cases

Very large special dividends

When a special dividend is very large relative to the share price (25% or more of the stock's value), exchange rules set the ex-dividend date differently: it's typically the business day after the payment date. In that case, if you sell before the ex-date, you also sell your right to the dividend.

ETFs and mutual funds

ETFs follow the same ex-date rules as stocks. Mutual funds use their own ex-date (sometimes called the reinvestment date), and the fund's net asset value drops by the distribution on that day. Buying a mutual fund just before a large year-end distribution in a taxable account means you get taxed on a distribution of what is effectively your own money.

Where to find ex-dividend dates

• The company's investor relations page or dividend press release (the most reliable source).
• The fund sponsor's distribution schedule, for ETFs.
• Your broker's quote page for the stock.

Once you know the dividend amount and frequency, plug them into the dividend calculator to see what reinvesting them could add up to.