The ex-dividend date decides who receives a stock's next dividend: buy before it and the payment is yours, buy on or after it and the seller keeps it. Since US stock trades moved to one-day settlement in May 2024, the ex-date usually lands on the record date itself. This guide sets out the four dividend dates, a worked timeline using Microsoft's November 2026 dividend, what happens to prices and open orders on the ex-date, and the separate rules for very large dividends. The rest of the series is collected in the stocks hub.
What is an ex-dividend date?
The ex-dividend date is the first trading day on which a stock trades without the right to its next declared dividend.
Investor.gov states the rule in two halves: if you buy before the ex-dividend date, you get the dividend, and if you buy on or after it, the seller gets it. Ex means without. The company chooses the record date, and the ex-date follows from it under FINRA Rule 11140 and the listing exchange's procedures; Nasdaq, for example, says it uses the company's dividend notice to set the ex-dividend date. Exchange-traded funds work the same way: the SPDR S&P 500 ETF Trust (SPY) pays quarterly and goes ex on its record date like any stock.
What are the four dividend dates?
A dividend moves through four dates: the declaration date, the ex-dividend date, the record date and the payment date.
| Date | What happens | Microsoft's December 2026 payment |
|---|---|---|
| Declaration date | The board announces the amount and the other three dates | Tuesday, September 15, 2026: $0.98 a share |
| Ex-dividend date | First day the shares trade without the dividend | Thursday, November 19, 2026 |
| Record date | The company identifies the shareholders it will pay | Thursday, November 19, 2026 |
| Payment date | The cash reaches shareholders' accounts | Thursday, December 10, 2026 |
Companies must announce well ahead. SEC Rule 10b-17 requires notice at least 10 days ahead of the record date, Nasdaq requires at least 10 calendar days, and NYSE Regulation asks for at least 10 calendar days and says record dates should not fall on a Saturday, Sunday or exchange holiday. If you hold shares in a brokerage account, the cash appears there on the payment date; investors in a reinvestment plan receive extra shares instead, as how dividend reinvestment plans work explains.
The payment date usually decides the tax year, with one exception worth knowing. IRS Publication 550 says that when a mutual fund, other regulated investment company or REIT declares a dividend in October, November or December, payable to holders of record on a date in that month, and pays it in January, you are treated as receiving it on December 31. It belongs on the earlier year's return, even though the cash arrived in the new year.
How did T+1 change the ex-dividend date?
Under T+1 settlement the ex-dividend date usually falls on the record date itself, where under the older two-day and three-day cycles it came one or two business days earlier.
The link is settlement. A buyer joins the company's list of holders only once the trade settles, so the ex-date is the first day on which a purchase would settle too late for the record date. Settlement for US stock trades now works like this: One business day after the trade (T+1), since May 28, 2024. A purchase made on the record date settles the next business day, after the record date, so the two dates coincide. FINRA's amended Rule 11140 puts it formally: for dividends worth less than 25% of the stock's value, the ex-dividend date is the record date if that is a business day, or the business day before it if not.
| Settlement cycle | In effect | Ex-dividend date |
|---|---|---|
| T+3 | Before September 5, 2017 | Two business days before the record date |
| T+2 | September 5, 2017, to May 27, 2024 | One business day before the record date |
| T+1 | Since May 28, 2024 | The record date itself |
Microsoft's own dividends show the shift. For its December 2016 payment, under T+3, the record date was Thursday, November 17 and the ex-dividend date Tuesday, November 15. For December 2026, both fall on Thursday, November 19. The changeover itself needed care: FINRA's Regulatory Notice 24-04 relayed a request from DTCC, SIFMA and the Investment Company Institute that companies avoid ex-dates and record dates from May 24 through May 28, 2024. For settlement in general, see how the stock market works.
When do you need to buy a stock to get the dividend?
Buy no later than the business day before the ex-dividend date, which under T+1 is normally the business day before the record date.
Worked example: Timeline for Microsoft's $0.98 dividend
You want to own 100 Microsoft shares for the dividend paid in December 2026.
- Tuesday, September 15: the board declares $0.98 a share, payable December 10 to holders of record on November 19.
- Wednesday, November 18: the last day to buy. A purchase today settles on Thursday, November 19, so you are on the record.
- Thursday, November 19: the ex-dividend date and record date. Shares bought today settle on November 20 and come without the dividend, so the seller keeps it. If you owned the shares at Wednesday's close, you can sell today and still be paid.
- Thursday, December 10: $98.00 arrives in your account for 100 shares.
Weekends and holidays move the ex-date, not the logic. If a record date fell on a Saturday, the ex-date would be the Friday before, so the last day to buy would be Thursday. What matters is the trade date: an order that fills on the ex-date, even at the opening bell, is too late. Microsoft's stock page has the share price and its history.
What happens to the share price on the ex-dividend date?
The share price typically opens lower by about the dividend, because new buyers no longer receive a payment that the previous day's price included.
Investor.gov cautions that a stock's price may drop by the amount of a significant dividend when it goes ex. For a stock priced at $400, a $0.98 dividend is about 0.25% of the price, small enough to vanish in an ordinary day's trading, so the drop is easiest to see with large special dividends. A holder's position is not worse off: what came off the share price is now owed as cash. Price-only charts show the ex-date as a small dip that total-return figures add back, which dividend investing basics explains along with why dividends are not free money.
What happens to open orders on the ex-dividend date?
Under FINRA Rule 5330, firms holding certain open orders lower their prices by the dividend on the ex-date, unless the customer marked them do not reduce.
The rule covers open orders to buy and open stop orders to sell, including good-till-canceled, limit and stop limit orders, because the dividend's price drop would otherwise fill or trigger them for reasons that have nothing to do with the market. It does not adjust open sell orders other than stops, open buy stop orders, orders governed by an exchange's own rules or cash dividends of less than one cent. The reduced price is rounded down to the next lower trading increment.
Worked example: How a $0.98 dividend adjusts open orders
Take a stock trading near $400 that goes ex for a $0.98 dividend.
| Open order before the ex-date | On the ex-dividend date |
|---|---|
| Good-till-canceled buy limit at $390.50 | Reduced to $389.52 |
| Sell stop at $380.00 | Reduced to $379.02 |
| Sell limit at $450.00 | Unchanged |
| Buy stop at $430.00 | Unchanged |
| Buy limit at $390.50 marked do not reduce | Unchanged |
Without the adjustment, a sell stop at $380.00 on a stock that closed at $380.50 the night before would trigger on a $0.98 drop that is simply the dividend leaving the price.
Stock splits and stock dividends are adjusted under the same rule by changing both price and share quantity, and a reverse split cancels pending orders. Limits, stops and the other order types are compared in stock order types.
How do special dividends and due bills work?
Dividends worth 25% or more of the stock's value go ex on the first business day after the payment date, and trades in between carry a due bill.
FINRA Rule 11140 applies this to cash dividends, stock dividends and splits, and warrant distributions of 25% or more. Shareholders on the record date still receive the payment from the company. But a buyer who purchases before the ex-date, even after the record date, is entitled to it, so the seller's trade carries a due bill: an obligation, settled between the brokers, to pass the payment on. FINRA Rule 11630 sets out how due bills are handled, and the NYSE publishes a report of the cases where the ex-date is not the record date, such as when due bills are attached.
Worked example: A $20.00 special dividend on a $60.00 stock
A hypothetical company trading at $60.00 declares a one-time $20.00 cash dividend, a third of its share price, with a record date of Tuesday, March 2, 2027 and a payment date of Friday, March 12, 2027.
- Tuesday, March 2: the record date. Holders on the company's books will be paid.
- Wednesday, March 3: you sell 100 shares for about $60.00 each. The stock still trades with the dividend attached, so your sale carries a due bill.
- Friday, March 12: the company pays you $2,000, and your broker passes it to the buyer's broker under the due bill.
- Monday, March 15: the ex-dividend date. The shares now trade without the $20.00, at around $40.00.
Not every special dividend crosses the 25% line. Microsoft's $3.00 special dividend of 2004 followed the normal schedule of the time: it went ex on Monday, November 15, two business days before the November 17 record date under T+3, and was paid on December 2.
What are the risks of trading around ex-dividend dates?
The main risks are that the price drop cancels out the dividend, that a quick sale makes it ordinary income, and that short sellers owe the payout.
- Dividend capture rarely pays. Buying the day before the ex-date and selling soon after collects the dividend, but the price typically falls by about the same amount, and spreads and trading costs come on top.
- Tax. In a taxable account the dividend is income either way, and selling before you have held the shares more than 60 days in the 121-day window around the ex-date makes it ordinary rather than qualified; qualified vs ordinary dividends works through Microsoft's November 2026 dates.
- Short positions. IRS Publication 550 notes that if you borrow stock to sell short, you may have to pay the lender amounts in lieu of the dividends paid while your position is open, as short selling explained covers.
- Buying a payout. In a taxable account, buying a stock or fund just before a large distribution hands back part of your purchase price as taxable income.
- Unusual cases. Distributions of 25% or more, stock dividends and splits on American depositary receipts and foreign securities, and dividends announced late all get ex-dates outside the normal rule under FINRA Rule 11140, so check the company or exchange notice instead of assuming the record date.