If comapny x announces dividends will be paid out tomorrow, can I buy 1000 shares today, collect my dividend on the shares, and then sell? Or do you have to hold the stock for a period of time before you can sell?


1 Answer 1


The timing works like this:

The board announces that the shareholders of record as of the "record date" will be paid a dividend on "payment date".

On the "ex date" the stock stops trading "cum dividend" and starts trading "ex dividend". If you buy the stock before, then you'll be a shareholder of record on the record date and will receive the dividend - even if you are the shareholder of record for a very short time at the right moment. But if you buy the stock after, then you will not be a shareholder of record on the record date and will not receive the dividend. Rather, whoever sold you the stock will still be a shareholder of record and will still receive the entire dividend instead. You are the shareholder of record or you are not. You get all of the dividend or nothing. The dividend is not pro-rated.

The prior day's closing price includes the dividend, while the ex date's opening price does not include the dividend.

Finally, the shareholders receive the cash on the payment date. Be careful not to spend it until you actually receive it.

(See also https://www.investopedia.com/terms/d/dividend-selling.asp Investopedia and https://www.nasdaq.com/market-activity/dividends for example.)

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    $\begingroup$ For example AAPL declared a dividend on 2021/07/27. If you buy today 2021/08/05 you will be paid your dividend on 08/12. But tomorrow 2021/08/06 is too late. nasdaq.com/market-activity/stocks/aapl/dividend-history $\endgroup$
    – nbbo2
    Aug 5, 2021 at 17:37
  • $\begingroup$ thanks @noob2 . these days, almost all equities settle T+2, making the `record date the next business day after the ex date, but it's possible to have a different number of days to settle, as much as 5 historically. $\endgroup$ Aug 5, 2021 at 19:04
  • $\begingroup$ Dimitri, your statement "The opening price the next day will be the closing price minus the dividend" is not correct. Market forces determine the opening price the next day, with one factor for that price discovery being that the dividend is no longer included. $\endgroup$ Aug 5, 2021 at 23:34
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    $\begingroup$ Thanks @NorgateData - I'll edit to make it more accurate. $\endgroup$ Aug 6, 2021 at 0:19

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