When a share goes ex dividend, the next dividend already declared will go to the previous holder, not to someone who buys from that date onward. Prices often drop by roughly the dividend amount around that cut off, though other news can swamp the effect. Settlement rules set the exact calendar.
Key takeaways
- Buying just before the ex dividend date is not free money. You usually pay a higher price that reflects the coming payment.
- The record date and payment date are related but not the same as the ex dividend date.
- Total return still counts dividends you actually receive, regardless of short term price adjustments.
- Always check the exchange calendar for a specific stock rather than guessing the cut off.