Ex-dividend date vs record date: what is the difference?

Key takeaways

• Buy before the ex-dividend date to receive the dividend.
• The record date is the company’s register cut-off.
• In the US the two dates usually coincide since T+1 settlement in May 2024.
• In the EU the ex-date is usually one business day before the record date.
• The price tends to drop by about the dividend on the ex-date.

If you want to receive a dividend, the date that matters most is the ex-dividend date. The record date is a related but different date. Mixing them up is one of the most common beginner mistakes.

The four dividend dates

1. Declaration date: the company announces the dividend amount and the other dates.
2. Ex-dividend date: the first trading day on which the stock trades without the right to the upcoming dividend.
3. Record date: the date on which the company checks its shareholder register to see who gets paid.
4. Payment date: the day the dividend is paid to shareholders.

The rule to remember

To receive the dividend, you must buy the stock before the ex-dividend date. If you buy on the ex-dividend date or later, the seller receives the dividend instead. If you sell on or after the ex-dividend date, you still receive it.

Why ex-date and record date are linked

Trades do not settle instantly. The ex-date is set so that anyone who buys before it is registered as a shareholder by the record date.

In the US, settlement moved from T+2 to T+1 on 28 May 2024. Since then, the ex-dividend date and record date are normally the same business day for US stocks. Previously the ex-date was one business day before the record date.

In the EU, settlement is T+2 for most shares, so the ex-date is usually one business day before the record date. Under Regulation (EU) 2025/2075, EU trades on trading venues move to T+1 from 11 October 2027, after which the ex-date and record date will usually coincide in the EU too.

Why the price drops on the ex-date

On the ex-dividend date, the stock usually opens lower by roughly the dividend amount, because buyers no longer get that cash. Market moves can hide this, but in principle the value has moved from the share price to your upcoming cash payment. This is why “buying just for the dividend” does not produce free money, especially after taxes.

Dividend capture and taxes

Some traders try to buy just before the ex-date and sell right after. After the price drop, trading costs and tax on the dividend, this rarely works out. Taxes on dividends vary by country, and foreign dividends may also have withholding tax.

Where to find the dates

• The company’s investor relations page or dividend announcement
• Your broker’s corporate actions calendar
• Hodlia’s market calendar

Example

Illustrative: a company declares a 0.50 dollar dividend, with an ex-date of Thursday and record date of Thursday (US, T+1), payable two weeks later. If you buy on Wednesday you get the dividend. If you buy on Thursday you do not.

Dividend ETFs

Funds that hold dividend stocks also have their own ex-dates. Some funds reinvest dividends instead of paying them. See accumulating vs distributing ETFs.

Common mistakes to avoid

• Buying on the ex-date and expecting the dividend.
• Selling right before the ex-date and missing a dividend you wanted.
• Trying dividend capture without counting tax and trading costs.
• Forgetting foreign withholding tax on international dividends.

Bottom line

The ex-dividend date decides whether you get the dividend: buy before it. The record date is the company’s administrative cut-off, and in the US it now usually falls on the same day. Learn more about dividend yield and the ex-dividend date in the glossary.

Frequently asked questions

If I buy on the ex-dividend date, do I get the dividend?

No. You must buy before the ex-dividend date.

Can I sell on the ex-dividend date and still get the dividend?

Yes. If you owned the stock before the ex-date, you keep the right to the dividend even if you sell on the ex-date.

Why are the ex-date and record date the same day in the US now?

Because US trades settle T+1 since 28 May 2024, so a trade before the ex-date settles by the record date.

Why does the stock fall on the ex-dividend date?

Because new buyers no longer receive the dividend, so the price typically adjusts down by roughly the dividend amount.

What is the payment date?

The day the dividend cash actually arrives, often days or weeks after the record date.

Do ETFs have ex-dividend dates?

Yes. Distributing ETFs have their own ex-dates and payment dates.

Sources

• SEC Investor.gov: Ex-dividend dates
• SEC: Shortening the securities transaction settlement cycle (T+1)
• Regulation (EU) 2025/2075 (EU T+1 settlement), EUR-Lex

This article is general education, not financial, tax or legal advice. Hodlia.fi does not recommend buying or selling any asset. Check current rules and do your own research before making decisions.