- Learn Basic Accounting in Less than 1 Hour!
- Accounting Basics
- What are Accounting Principles
- Accounting Cycle
- Accrual Accounting Basis
- Cash Basis Accounting
- Matching Principle of Accounting
- Conservatism Principle of Accounting
- Cash Accounting
- What are Accounting Policies?
- Accounting Estimates
- Mark to Market Accounting
- Cash Accounting vs Accrual Accounting
- Operating Cycle
- Fiscal Year
- Fiscal Year vs Calendar Year | Top Differences | Examples |
- Financial Reporting
- Consolidated Financial Statement
- Audited Financial Statements
- Accounting Scandals
- IFRS vs US GAAP
- IFRS vs Indian GAAP
- Debit vs Credit in Accounting
- Double Entry Accounting System
- Journal in Accounting
- Ledger in Accounting
- Journal vs Ledger
- What is Trial Balance ? | Examples | Steps | Prepare | Errors
- Reconciliation of Books | Types, Best Practices | Useful Tips
- Petty Cash | Meaning | Template | Accounting | Example
- Debit Note | Debit Notes Accounting & its Top Characteristics
- Credit Note
- Debit Note vs Credit Note | Top 7 Differences (Infographics)
- Balance Sheet
- Balance Sheet
- Accounting Equation
- Assets vs Liabilities | Top 9 Differences (with Infographics)
- Trial Balance vs Balance Sheet | Top 10 Differences You Must Know!
- Balance Sheet vs Consolidated Balance Sheet
- Bank vs Company Balance Sheet
- Commitments and Contingencies
- Management Discussion & Analysis
- Revenue Reserve vs Capital Reserve | Top 7 Differences
- Revenue Reserve
- Capital Reserve
- Capital Receipts vs Revenue Receipts | Top 8 Differences
- Capital Lease vs Operating Lease | Top Differences You Must Know!
- Debt vs Equity Financing | Advantages | Disadvantages | Example
- Internal vs External Financing | Top 7 Differences (Infographics)
- Available for Sale for securities
- Held to Maturity to securities
- Cash and Cash Equivalents | Examples, List & Top Differences
- Cash Equivalents
- Restricted Cash
- 3 Types of Inventory | Raw Material | WIP | Finished Goods
- Current Assets
- FIFO vs LIFO
- First In First Out (FIFO)
- Last in First Out (LIFO)
- Non-Current Assets
- Accounts Receivables? | Definition, Accounting Examples
- Accounts Receivables Factoring
- Allowance for Doubtful Accounts
- Accrued Revenue
- Liquid Assets
- Marketable Securities on the Balance Sheet | Top Examples
- Prepaid Expenses
- Tangible vs Intangible Assets
- Net Tangible Assets | Calculate Net Tangible Assets Per Share
- Tangible Assets
- Salvage Value
- Residual Value
- Fixed Capital vs Working Capital | Top 8 Differences (Infographics)
- Impariment of Assets
- Negative Goodwill
- Accounts Payable | Days Payable Outstanding | Formula |
- Current Liabilities | List of Current Liabilities on Balance Sheet
- Accrued Liabilities
- Notes Payable
- Revolving Credit Facilities
- Bonds Payable Accounting
- Bad Debt Reserve Allowance
- Deferred Expenses
- Unearned Revenue (Sales)
- Deferred Revenue (Income)
- Current Portion of Long-Term Debt (CPLTD) | Balance Sheet
- Long-Term Debt in Balance Sheet
- Financial Liabilities | Definition, Types, Ratios, Examples
- Long-Term Liabilities
- Accounts Receivable vs Accounts Payable
- Minority Interest
- Accounting for Convertibles
- Accounting for Derivatives
- Financial Lease vs Operating Lease
- Off balance Sheet Financing
- Finance vs Lease
- Shareholders Equity
- Shareholders Equity Statement
- Negative Shareholders Equity
- Par Value of Stock
- Share Capital
- Outstanding Shares (Definition, Formula) | Stocks Outstanding
- Additional Paid-in Capital on Balance Sheet
- Retained Earnings (Formula, Examples) | How to Calculate?
- How to Calculate Net Worth of a Company | Formula | Top Examples
- Owners Equity
- Preferred Shares
- Weighted average Shares average outstanding
- Share Buyback
- Accelerated Share Repurchase
- Restricted Stocks Units (RSUs)
- Contingent Shares
- Stock Splits Share
- Treasury Stock Shares
- Dilutive Securities
- Anti Dilutive Securities
- Stock Dividend
- Cash Dividend
- Preferred Dividends
- Ex dividend date
- Date of Record of dividends
- Cost of preferred Stock
- Common Stock vs Preferred Stock | Top 8 Differences You Must Know
- Stocks Vs Shares
- Stock Options Vs RSU
- Shareholder Equity vs Net Worth | Top 5 Differences You Must Know!
- Stock vs Option
- Stock vs Mutual Funds
- Income Statement
- Income Statement | Top Examples | Template | Format | Analysis
- Cost of Goods Sold
- Direct Costs
- Indirect Costs
- Non Recurring Items
- EBIT vs EBITDA | Top Differences | Examples | Calculation
- Depreciation – Formula | Types | Most Comprehensive Guide
- EBITDA vs Operating Income
- Straight Line Depreciation Method
- Amortization of Intangible Assets
- Unrealized Gains (Losses)
- Non Cash Expense
- Share based compensation
- Restructuring Cost
- Extraordinary Items
- Double Taxation
- Net Operating Loss (NOL)
- Tax Shield
- Sundry Expenses
- Interest vs Dividend | Top 9 Differences (with Infographics)
- EBITDA vs Net Income
- EBIT vs Net Income
- EBIT vs Operating Income
- Accounting Profit vs Economic Profit
- Income Tax vs Payroll Tax
- Tax credits vs Tax deductions
- Gross Income vs Net Income
- Profit vs Revenue
- Revenue vs Earnings
- Revenue vs Income
- Profit vs Income
- Revenue vs Sales
- Capitalization vs Expensing
- Income Statement vs Balance Sheet | Top 5 Differences You Must Know!
- Statement of Comprehensive Income | Items | Colgate Example
- FOB Destination
- Explicit Cost
- Implicit Cost
- Direct cost vs Indirect Cost
- Nopat vs Net Income
- Marginal Costing vs Absorption Costing
- Cash Flow Statement
- Cash flow from Operations | Formula, Calculations & Examples
- Cash Flow from Investing Activities (Formula & Top Examples)
- Cash Flow From Financing Activities | Formula & Calculations
- Cash Flow Analysis
- Fund Flow Statement
- Direct vs Indirect Cash Flow Methods
- Cash flow vs Net Income | Key Differences & Top Examples
- Cash Flow vs Fund Flow | Top 8 Differences (with Infographics)
- Accounting Careers
- Accounting Interview Questions
- Financial Accounting Careers
- Top Accounting Firms
- Big Four Accounting Firms
- Forensic Accounting
- Cost Accounting
- Financial Accounting
- Accounting vs Engineering
- Finance vs Accounting
- Bookkeeping vs Accounting
- Accounting vs Auditing
- Bookkeepers vs Accountants
- Accounting vs Financial Management
- Cost Accounting vs Financial Accounting
- Cost Accounting vs Management Accounting
- Financial Accounting vs Management Accounting
- Accounting Firms in Australia
- Accounting Firms in Canada
- Top Accounting Firms in US
- Accounting Books
What is Ex-Dividend Date?
In layman’s language, “ex-dividend date” is just an “eligibility criterion” which needs to be fulfilled by a particular stockholder in order for him or her to receive either cash dividend or stock dividend.
This dividend date is the segregation criteria for stockholders to make them eligible to receive the next cash or stock dividend. If one purchases a stock on its dividend date or after, they will not receive the next dividend payment. Instead, the seller gets the dividend. While in contrast, if one purchase before the dividend date, they will be eligible to get the next dividend as per company announcement.
We see above, ex-dividend date example. Steward Financial Corp will start trading ex-dividend on July 31, 2018. The cash dividend per share of $0.03 is scheduled to be paid on 15th August 2018.
WallStreetMojo Free Accounting Course
You will Learn Basics of Accounting in Just 1 Hour, Guaranteed!
* Please provide your correct email id. Login details for this Free course will be emailed to you
Ex-Dividend Date Example
For Ex-dividend date example, let’s say Company XYZ has shares trading at INR 50 as on date. This amount is referred to as “current market value” and can go up or down depending on how the market behaves and the company performs. When Company XYZ decides to buy back those shares, they offer a higher price, say INR 60 as an incentive for holders to sell it. This way, shareholders can safely earn profit against the risk of share prices going down in the future.
Cash dividend and stock dividends are processes wherein the shareholders receive either cash from the company or additional stocks from the company. While both cash dividends and stock dividends have many types and are quite technical in nature, in this article we will focus more on learning the “eligibility criteria” for receiving these dividends.
While the definition looks pretty straightforward, let’s try to understand the chronology of the announcements here.
Chronology of Dividend Dates
#1 – Declaration Date
The day the company reports their earnings; they also “declare” their cash dividend or stock dividend announcement as decided by the senior management of the company.
#2 – Payment Date
This is the date when the company will actually make the cash dividend or stock dividend payments to their “eligible” stockholders.
Declaration date is the date when a company announces about the future cash or stock dividend payments, if at all. Payment date is the date when those announced cash or stock dividends are actually paid by the company.
#3 – Record Date
Record date is the cut-off date for shareholders to receive the next cash or stock dividend. In other words, everybody who is a “shareholder” as on “record date” is eligible to receive the next dividend by the company.
Where is the “Ex-Dividend Date” then!?
As we learned above, when the company makes the announcement to issue a dividend (called its declaration date), it also announces its record date (cut-off date) by which the stock holder’s name must be present on the company’s official records in order to receive the dividend.
One can further infer that as soon as the record date is announced, consequently the “ex-dividend date” is automatically fixed.
The “ex-dividend date” is generally two working days prior the record date. If the purchase of the stock is made on or after its ex-dividend date, that particular stockholder is not liable to receive any dividend benefits. While, if the purchase of stock is made before the ex-dividend date, the buyer of the stock is eligible to receive the announced dividend.
A Timeline of Ex-Dividend Date
When we buy shares of a company, we do it primarily because we are hopeful of making a profit out of it in the future. What that actually means is that we are expecting the company, of whose stock we are buying, to do well in business and make the profit.
When companies do make a profit, they, at times, return a part of that profit to its shareholders. Companies have various ways of returning that excess cash (profit earned during the business cycle) to its shareholders. They majorly do it in the following ways:
- Cash Dividends
- Stock Dividends
- Share Repurchase
Let us take an ex-dividend date example to understand the concept timeline of things in a better manner.
- Suppose a company ABC makes its earnings announcement on August 1, 2017. This will be termed as the Declaration Date. On this day, it will make an announcement of paying dividends on 31st of August, 2017. Hence, the payment date is 31 August 2017.
- The dividends will be paid to stockholders which are on company records as on 20th August 2017, which is termed as “record date”.
- However, the settlement period is for 3 days. So to be on record date by 20th August 2017, one has to buy shares 3 days before the record date. This date is termed as “cum-dividend date”. In the above example, the “cum-dividend date” is August 17th, 2017.
- Those who will buy shares on 18th August 2017 will NOT be eligible to receive cash or stock dividend on August 31st, 2017. Hence it is called the “ex-dividend date”.
Significance of “Ex-Dividend Date”
To summarize the entire discussion, if you buy a stock before the ex-dividend date, then you will receive the next upcoming dividend payment. If you purchase the stock on or after the ex-dividend date, you will not receive the dividend.
This has been a guide to what is Ex-dividend date? Here we discuss the chronology of dividend dates, timelines of ex-dividend date along with ex-dividend date examples and its significance. You may learn more about Corporate Finance from the following recommended articles –