Price On The Ex-Dividend Date?
It's commonly stated that the price of a stock is automatically adjusted down by the amount of the dividend on the ex-dividend date and while in practice it often looks as if that's what takes place, technically that's not really what happens. The only trade price that the exchange reduces by the exact amount of a dividend is the quote of the previous day's close, not any actual trade. But because the quote of the previous day's closing trade AND the bid and the ask of all outstanding orders are also reduced (unless placed with a Do Not Reduce restriction) by the exchange, plus the fact that the net asset value of the stock is now less (by the exact amount of the dividend), when trading begins on the ex-date the effect is usually a reduction in price approximating the size of the dividend, as traders are well aware of the reduction in the stock's net asset value.
Such an informal (though generally effective) reduction in stock price on the ex-dividend date is, of course, much more noticeable if the dividend is larger than the normal trading range of the stock. For example, if a stock has a normal daily trading range of, say, twenty five cents and the dividend is a few cents, the effect of a few cents' adjustment of the stock price may not be noticeable. However, if the dividend is two dollars, the price adjustment will nearly always be very noticeable, as it's well beyond a twenty five cent normal daily trading range.
So, while the market is free to trade the stock at any price on the ex-date, even at the open, much more often than not it trades lower by about the amount of the dividend. The only way to be sure whether any specific stock will or won't do so on its ex-date is to wait and see what happens.
000001 TS @ BD +3; 10.15.17
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A day on which the stock exchanges and the banks, agencies & depositories for securities in New York State are open for business. Any day on which the stock exchanges are open but the banks are closed is not counted as a business day for the purpose of calculating dividend ex-dates.
Conditional Dividend/Distribution A dividend or distribution conditional upon an event or circumstance that has not yet happened at the time of declaration.
Declaration Date The date a dividend is declared by the company. The amount of the dividend is also declared except in some cases of a conditional dividend.
An ex-dividend date that occurs one business day after the payment date.
The payment of cash or securities that are not part of a company's earnings.
A payment of earnings to shareholders.
A statement of money owed.
Ex-Dividend/Distribution Date The first day on which a stock trades without the right to receive the dividend/distribution.
A dividend/distribution amounting to less than 25% of a company's stock price.
The registered owner of a security on the Record Date.
The day the dividend payment
Record Date The day a buyer of a stock must be the registered owner (owner of record) to receive a dividend.
Special Dividend A dividend that is not regularly scheduled.
The requirement that securities transactions be settled in two business days. (Before September, 2017, securities transactions were settled in three business days. Before June 7, 1995, securities transactions were settled in five business days.)