Ex-dividend date
The ex-dividend date, also known as the reinvestment date, is an investment term involving the timing of payment of dividends on stocks of corporations, income trusts, and other financial holdings, both publicly and privately held. If a sale is before this date, the dividend belongs to the new owner; if on or after the date, the seller is entitled to the dividend.
If you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend.
Background
Many publicly traded companies, and some privately held ones, pay dividends to their stockholders. The question of who should be paid dividends becomes complex, as these companies are continually being traded and the composition of their shareholders changes each day. To settle this question, companies designate a date, known as the record date. Dividends are paid to the holders of shares as shown on the share register at the record date. It takes time for a stock purchase to be recorded on the register however, so stock exchanges set a date known as the ex-dividend date - generally two business days prior to the record date - to allow time for this processing. If, for whatever reason, a share transfer prior to the ex dividend date is not recorded on the register in time, the seller has to repay the dividend to the buyer when he receives it. Thus the key date is the ex-dividend date.