Ex-dividend or XD is the date which is set after the declaration of dividend, the investor who holds the stock till this date is entitled for dividend payment.
What does ex dividned date mean? If a stock is bought exactly at or before the ex-dividend date the seller will be the one eligible for the current dividends. Since a complete trade takes T+1 days to settle, a day or on the date purchases is not valid. Neither eligible for the dividend nor will buy at cheap price relative to the previous dates.
Whenever a dividend is declared on the declaration date, the price runs north gradually and heads south after the ex date. Inferences from the observation of dividend issue dates, price tends to correct exactly equal to the dividend amount.
Ex dividend vs Record date:
According to the chronology of dividends (DERP) record date is the day after the ex dividend date. The record date is the day investor appears in the records of the company of whom all are eligible for the current dividend issue. This has nothing to do with the investor’s action. For unusual dividends (25% or more) record date falls after the payment date ensuring the price stability.
How dividend yield is calculated?
Dividend yield is a measure of absolute rate of return before tax. The dividend amount is divided by the current price of the stock. A meaner version, divide the cash amount with the purchase price.
How dividend is paid?
Dividends will be credited directly to the bank account linked to your demat account. The broker does nothing in case of cash dividends, in the event of delayed dividends they can direct us on how to approach the management.
Who gets dividend on shares?
Investors who hold settled shares till the ex dividend date, those are the people entitled to the dividend issue. Even buying before a day of the ex date isn’t appreciable for short term profiteers.
When dividend will be declared?
Dividends are declared after the disclosure of the fiscal performance report. The ex dividend date and the amount as dividend will be specified in the annual report. Dividend stocks or interim payers declare dividend after a quarter results when they feel dividend payment is the best reward to proceed with.