Question: This question is regarding the Ex-Dividend Date. If I purchased a stock after the Ex-Dividend Date, does that mean I will not receive the Dividend per Share?

Eddie Chou

Answer:

Dear Eddie,

This is a topic that's confusing to many, many investors. And it's important to understand the answer because it may affect when you decide to sell a stock.

The term ex-dividend date literally means "without a dividend." So, yes. A stock purchased during the ex-dividend period will not pay a previously declared dividend to its new owner.

You will know when a stock is trading ex-dividend because it has the symbol "x" next to its listing in the newspaper.

I want you to know the definitions of three other closely connected phrases --they all relate to who receives stock dividends, and exactly when.

• Declaration date. This is the date when a company's board of directors meet and announce the date and amount of the next dividend. Once they make this declaration, dividends become a legal liability of the firm.
  
  
• Record date. This date determines which shareholders officially own the stock and therefore are eligible to receive the dividend announced on the declaration date. In other words, as of the "official date of record," only stockholders listed as owners will receive the dividend that has been declared. They are called "stockholders of record."
  
  
• Payment date. The date on which the dividend is paid to stockholders of record.

Good luck! And feel free to write in again.