A simple question, but I can’t find an answer to it anywhere.
Tables of share prices in newspapers often have a little asterisk next to some shares, indicating that the price is ex-dividend. (That is, the record date for paying out the latest dividend has passed, and if you buy the share you won’t get the dividend.)
But dividends are paid out quite frequently - typically twice a year - so of course you will still get the next dividend. So when is an ex-divi share no longer ex-divi?
The ex-dividend date is usually two days before the dividend is paid. Once the dividend date is reached, the stock is no longer ex-dividend.
The date only applies if you buy the stock in the two days before the dividend date. You lose out on the dividend (because it takes time to register you as owner of the stock), so the price drops to compensate for that.
Most American dividend paying companies pay quarterly, not twice a year. Some securities (primarily BDCs, REITs, CEFs) pay monthly. There has been a trend lately of shifting to monthly payments by many “pass through” investment classes.
As far as you as an investor are concerned, the ex date is the first day you can sell something you are holding and still get the current dividend. As a buyer, you have to buy it before then to get the dividend. Buying it on the morning of the ex date is too late. As noted, the ex date is two business days before the dividend date (on the NYSE or NASDAQ), which may be up to 4 calendar days if a weekend is crossed, more if holidays are crossed.
You will note something like this in dividend announcements:
The company’s press release often doesn’t mention the ex date. In this case, it is Nov 6, 2 days before Nov 8.
“How long is a company ex div?” isn’t really that relevant. Quote services like Yahoo often subtract the dividend from the previous days close in computing the change on ex div day because the share price is expected to drop by that amount. That’s what they are telling you. On Nov 6 when PETS trades ex-div, they will subtract $0.17 from the Nov 5 close, and count a drop of $0.10 in the actual price as a $0.07 gain. Note that not all quote services do this, and sometimes they don’t catch the dividend, even if they do.
It is a bit confusing to speak of a single “Dividend Date”. There are three important dates for a dividend.
Record Date This is the date on which you must own a share to be entitled to a dividend.
Ex-dividend Date This is the date before which you must buy a share in order in order to take possession of the share by the record date.
Payment Date This is the date dividend payments are actually distributed. It is typically a few days or weeks after the record date.
A stock will be said to be ex-dividend from the ex-dividend date until the payment date. I would say that a stock is no longer “ex-divi” after the payment date.
Yeah, I agree that “dividend date” is misleading and “record date” is better, as per the example. I actually tried to go back and change that, but I was past the edit window. It is important to note that you can also sell on the ex date and get the dividend. I’ve done it, though not often. Except for reading press releases like the one I gave as an example, “record dates” are actually a mechanism the investor need not be concerned with. The ex date is when you buy or sell by, the pay date is when they cough up the money.