XD

What is XD in business?

The ex-dividend date is closely related to the record date, and in many cases the two dates are the same.

The record date is a date selected by the company’s board of directors, and it is the cut-off point at which the full list of the company’s investors is updated. If you purchase stock before the record date, you’ll be on the list; if you sell before the record date, your name is removed.

The ex-dividend date is typically either the same day as the record date or the next business day, and it serves as the deadline for investors to receive the next dividend distributed by the company. Purchasing a stock after the XD date means you won’t receive a dividend until the round following the upcoming payout.

When a stock is traded ex-dividend, the price usually reflects the fact that the upcoming dividend will still go to the seller of the stock. In many cases, the price will go down by the exact amount of the upcoming dividend once the XD date is passed.

For more information on ex-dividend dates and how profits are distributed to shareholders, check out LegalZoom’s complete guide to dividends. 

FAQs 

What happens when a stock goes ex-dividend?

When a stock goes ex-dividend, the owner of the stock on the XD date is locked in as the recipient of the next dividend payment.

Is it less profitable to buy an XD stock?

In many cases it doesn’t matter whether you buy a stock before or after the ex-dividend date passes, since the price of the stock is usually adjusted to reflect the amount of the dividend.

How long does it take for the price of an XD stock to go back up?

This can vary based on market conditions and the company’s individual situation, but prices for a stock that has recently dropped after going ex-dividend often stabilize within a couple of weeks.