Q:

What does ex-dividend mean?

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Quick Answer

The ex-dividend date determines whether the stock purchaser or seller receives the next payable dividend, states the U.S. Securities and Exchange Commission. Stockholders purchasing before the ex-dividend date receive the next dividend payment. Stockholders purchasing on or after the ex-dividend date do not receive the next payment; the seller does.

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Full Answer

Stock exchange rules determine ex-dividend dates, which are typically set for stocks two business days before the record date. The record date is the date on which a shareholder must be on the company's books as owner of the stock, explains the SEC. Companies set record dates when they declare dividends, and they use the dates to establish who should receive significant material, such as financial reports and proxy statements. When the dividend is at least 25 percent of the stock value, special rules apply to postpone the ex-dividend date until one business day after the dividend payment.

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