When a company decides to pay dividends, it establishes a date of record. That date is the day shareholders must be registered on the company’s books in order to receive dividends. On or after the ex-dividend date, dividend payment for the stock (once traded) will be given to the seller, the person who owns the security, rather than the buyer, the person who holds the stock.

The ex-dividend date, or ex-date, is usually established two business days before the date of record. Shareholders who purchased the dividend prior to the ex-dividend date are entitled to receive the dividend. Shareholders who purchased the stock on the ex-dividend date or later will not receive the upcoming dividend. The shareholder’s portion of that dividend will instead be paid to the seller of the stock.

After the ex-dividend date is announced, the stock may decrease in value by the amount of the anticipated dividend.

Similarly, you forfeit your rights to the stock dividend if you sell your stock before the ex-dividend date. In this situation, you would pay any shares you receive from the dividend to the buyer of the stock. Sell a stock on or after the ex-dividend date in order to receive an upcoming dividend.

- The Securities and Exchange Commission at http://www.sec.gov gives a good explanation of ex-dividend dates and how they work.

- http://www.ex-dividend.com/ also has information on how ex-dividend dates work and their impact on buying and selling stocks.

- http://www.dividend.com/ provides current and upcoming ex-dividend dates for stocks.