Thus, investors buying after the dividend announcement and before the ex-dividend date often pay a higher price for the security. If you jump into the stock on or after the ex-dividend date, you don't get the dividend.
You can sell the stock after the ex-dividend date and still receive the dividend.
The stock exchanges or the National Association of Securities Dealers sets this date. Once the stock "goes ex-dividend," the price usually falls to reflect the value of the dividend payment since after the ex-dividend date, buyers of the stock or fund will not receive the upcoming dividend. You need to own shares on or before the ex-dividend date. Using Royal Dutch Shell stock, on of my long-term favorites, I'll compare total returns around any of the previous 29 ex-dividend dates across three different categories.
You might think it’s a good idea to buy a stock shortly before the ex-dividend date , and sell it on or shortly thereafter, in order to … 1. The stock exchange then sets an "ex-dividend" date, usually two business days before the record date. That being the case, an investor can buy the stock on the day prior to ex-dividend (say, for $100), sell it on the ex-dividend date (say for $99.50), and collect the $1 dividend a few weeks later, leading to a total return of $0.50 on the trade (losing $0.50 on the stock, but gaining the $1 dividend). This is a terrible strategy for the following reasons. You could buy before that date, qualify for the dividend by holding until the record date and then dump the stock, but this can be risky. This can be an important for dividend investors when buying a stock on the ex-dividend date. Similarly, investors buying on or after the ex-dividend date get a “discount” on the security price to make up for the dividend they won’t be receiving.
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