How the ex-dividend date works after T+1

UXS video · Stocks · 0:44 · Published

UXS video · synthetic voice · Mixkit music · MP4, 5.1 MB

What this video covers

When you must buy to get a dividend, why the ex-date and record date now usually coincide under T+1 settlement, and why the price drop on the ex-date means no free money. Includes the holding period for the qualified tax rate.

Sources and the longer explanation: How Does the Ex-Dividend Date Work?.

Numbers shown on screen

  • 60+: days held
  • 121: day window
  • 25%+: Dividend as a share of the stock price

How the visuals were made

In 0:44 the video moves through 7 scenes, including a timeline: May 2024 – US settlement moves to T+1; Now – Ex-date generally = record date; a side-by-side comparison of Before ex-date and On the ex-date; a timeline: Day before ex-date – Last day to buy; Ex-date – Seller keeps the dividend. All graphics were rendered frame by frame by UXS; no stock footage, logos or faces are used.

Chapters

  • 0:00 Dividends: Want the dividend? Buy before the ex-date
  • 0:04 Settlement change
  • 0:12
  • 0:18 Qualified dividend holding period
  • 0:24 Who gets the dividend
  • 0:31 Dividend as a share of the stock price
  • 0:40 Risk note

Transcript

Want the dividend? You must buy the stock before the ex-dividend date.

Since US settlement moved to T+1 in May 2024, the ex-date is generally the same day as the record date.

On the ex-date the price usually drops by about the dividend, so buying just for it isn't free money.

For the qualified tax rate, you must hold more than 60 days in a 121-day window.

So buy on or before the trading day before the ex-date. Buy on the ex-date or later, and the seller gets the dividend.

Large dividends are different. For payouts of 25% or more of the share value, the ex-date is the first business day after the payment date.

Educational only, not financial advice.