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Finance Dictionary and Glossary of Investment Terms
ex-dividend date
Definition 1.
The first day of the ex-dividend period. The ex-dividend date was created to allow all pending transactions to be completed before the record date. If an investor does not own the stock before the ex-dividend date, he or she will be ineligible for the dividend payout. Further, for all pending transactions that have not been completed by the ex-dividend date, the exchanges automatically reduce the price of the stock by the amount of the dividend. This is done because a dividend payout automatically reduces the value of the company (it comes from the company's cash reserves), and the investor would have to absorb that reduction in value (because neither the buyer nor the seller are eligible for the dividend). also called reinvestment date.
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Definition 2.
The date on or after which a security begins trading without the dividend (cash or stock) included in the contract price. (See dividend, dividend notification)
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