Glossary · UK
What is Ex-Dividend Date?
The date on or after which a share buyer is no longer entitled to the next declared dividend, because it goes to whoever held the share the day before.
Full Definition
The ex-dividend date (often shortened to "ex-div date") is the cut-off date used to determine who is entitled to receive a company's next declared dividend. Anyone who owned the shares at the close of business on the day before the ex-dividend date (the "record date" in older terminology, though most markets now align the two) receives the dividend; anyone who buys the shares on or after the ex-dividend date does not, even if they hold the shares by the time the dividend is actually paid, because the entitlement is fixed on that earlier date. As a result, a share's price typically falls by roughly the amount of the dividend on the ex-dividend date itself, reflecting the fact that new buyers are no longer buying the right to that payment -- this is a mechanical market adjustment rather than a loss of value. Investors sometimes try to exploit this pattern through "dividend capture" strategies (buying just before the ex-dividend date and selling shortly after), though transaction costs, the price drop itself, and tax on the dividend received usually erode much of the apparent benefit. For UK investors, dividends received are taxed under the dividend tax rules regardless of how briefly the shares were held, subject to the annual dividend allowance.