"Ex-Dividend" Explained

A company's dividend is not paid simply to whoever is holding the stock on the day the dividend is paid. Instead, an "ex-dividend" date is set, often several weeks before payday. If you buy shares of a dividend-paying stock on or after the ex-dividend date, you won't receive the upcoming dividend payment. The person who owned the stock when it went ex-dividend gets that chunk of change.

You can often tell which stocks are trading ex-dividend, because they'll have a special designation in stock listings, such as an "x" next to their name.

You might think it would be a neat trick to buy such stocks just before they go ex-dividend, so that you can quickly profit from the dividend amount. But stock prices get adjusted downward around the ex-dividend date to compensate for the upcoming dividend payout. As Snidely Whiplash would mutter, "Curses! Foiled again!"

If your curiosity is now piqued about other confusing words you've heard (junk bonds? Spiders? margin calls?), head over to our handy online glossary.

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