Ex-Dividend Date Explained
What is the ex-dividend date in Australia? How it works, why the share price drops, and exactly what you need to do to receive your dividend.
By Timothy Hirou GaschereauPublished 7 min read
The ex-dividend date is the single most important date for dividend investors to know. Get it wrong by one day and you miss the payment entirely. This guide explains exactly what it means, how it fits with the other key dates, and what you need to do (or not do) to make sure the dividend lands in your account.
New to dividends? Start with what a dividend is, then come back for the timing.
🎯 The essential: You must buy shares before the ex-dividend date to receive the upcoming dividend; buy on or after it and you miss out. The share price typically falls by roughly the dividend amount on the ex-date, which is normal. Selling on or after the ex-date is fine, because your entitlement is locked in at the record date. To claim franking credits, most investors need to hold shares at risk for 45 days, unless their total franking credits for the year are $5,000 or less.
What is the ex-dividend date?
The ex-dividend date is the first day a share trades without the right to the next dividend. Think of it as the cut-off line: own the shares before this date and you are entitled to the dividend; buy on or after it and the dividend goes to the previous owner. On the ASX, the ex-date sits one business day before the record date, because T+2 settlement means a purchase takes two business days to appear on the register. That gap ensures buyers who transact before the ex-date are registered by the record date.
The four key dates in a dividend
Every dividend involves four dates, always in the same order.
| Date | What it is | What you do |
|---|---|---|
| Declaration | The board announces the dividend, ex-date, record and payment dates | Note the ex-date in your calendar |
| Ex-dividend | First day shares trade without the dividend | Buy before this date to get it |
| Record | The company checks its register (about a day after the ex-date) | Nothing; you are already on it |
| Payment | The dividend is paid, usually a few weeks later | Nothing; it arrives automatically |
Why the share price usually drops on the ex-dividend date
Before the ex-date, shares trade "cum-dividend" (with dividend): the upcoming payment is baked into the price because whoever buys will receive it. On the ex-date, shares trade "ex-dividend" (without it), so the market adjusts the price down by roughly the dividend amount. For example, a $10.00 share paying a $0.50 dividend typically opens around $9.50 on the ex-date. The $0.50 has not disappeared; it is on its way to shareholders who owned the stock before the ex-date. This is not a loss: if you held before the ex-date, your total position (share value plus incoming cash) is roughly unchanged. It also helps you read a dividend yield figure more accurately.
Buying or selling around the ex-date
- Buy before the ex-date: you receive the dividend.
- Buy on or after the ex-date: you do not receive this one (but may get the next, if you still hold before the following ex-date).
- Sell before the ex-date: you miss the dividend; the buyer gets it.
- Sell on or after the ex-date: you still receive it, because you were on the register at the record date.
The key insight: your entitlement is locked in at the record date, so selling afterwards does not undo it.
Does this apply to ETFs?
Yes, the same logic applies. ETFs have an ex-distribution date that works identically: you need to be a unitholder before it to receive that period's distribution. The only real difference is terminology, since ETF distributions can bundle dividends, interest and realised capital gains. See our guide to how ETFs pay distributions.
The 45-day holding rule and franking credits
Australian companies can attach franking credits to their dividends, representing tax already paid, which you can use to offset your own tax. To claim them, the ATO generally requires you to hold the shares at risk for at least 45 days (not counting the day you buy or sell), to stop investors buying purely to harvest credits and selling immediately. The exception: if your total franking credit entitlement for the year is $5,000 or less, the 45-day rule does not apply, and most retail investors fall under this threshold. For the full picture, see how dividends and franking credits are taxed.
A worked example
Take a fictional company, BlueSky Ltd, paying a $1.00 fully franked dividend.
| Date | Event |
|---|---|
| 1 Sep (Declaration) | BlueSky announces a $1.00 dividend. Ex-date 15 Sep, record 16 Sep, paid 30 Sep. |
| 15 Sep (Ex-date) | Shares open about $1.00 lower. Buy today or later and you miss this dividend. |
| 16 Sep (Record) | The register is checked. Only pre-15 Sep owners are on the list. |
| 30 Sep (Payment) | $1.00 per share lands, with franking credit documentation. |
Buy on 12 September and you are on the register, so you receive $1.00 plus franking credits (and your total position is roughly unchanged despite the price drop). Buy on the 15th and you get no cash this time, though you paid a lower price.
Common misconceptions
- "I can buy the day before and flip it for free money." No. The price drops by roughly the dividend, so the $0.50 you receive is offset by about $0.50 of capital value. After brokerage you are usually slightly worse off.
- "The ex-date and record date are the same." They are not. The ex-date is typically one business day before the record date. Always time a purchase off the ex-date, not the record date.
The ex-dividend date is the cut-off: own the shares before it to receive the dividend, buy on or after and you miss out. The price falling by roughly the dividend on the ex-date is normal, not a loss, and selling on or after the ex-date still keeps your entitlement. Just watch the ex-date, not the record date, and mind the 45-day rule if your franking credits top $5,000.
❓ Frequently asked questions
What does ex-dividend date mean?
+
The ex-dividend date is the first day a share trades without the right to the upcoming dividend. If you buy shares before this date, you are entitled to the dividend. If you buy on or after it, the dividend goes to the previous owner. The word ex is Latin for without, so ex-dividend literally means without dividend.
Do I get the dividend if I buy on the ex-dividend date?
+
No. Buying on the ex-dividend date means you miss that particular dividend. You needed to buy the shares before the ex-date for your name to appear on the register by the record date. You may still receive future dividends if you keep holding the shares before the next ex-date.
Can I sell on the ex-dividend date and still get the dividend?
+
Yes. If you sell on or after the ex-dividend date you still receive the dividend, because your entitlement was locked in at the record date, which you qualified for by owning the shares before the ex-date. The buyer will be eligible for the next dividend, not this one.
Why does the share price drop on the ex-dividend date?
+
Because the company is about to pay cash out to shareholders, making the business worth slightly less. Before the ex-date the upcoming dividend is baked into the price (cum-dividend). On the ex-date, the price adjusts down by roughly the dividend amount to reflect that the cash is leaving. It is a mechanical adjustment, not a sign of trouble.
What is the record date?
+
The record date is when the company checks its share register to confirm who is entitled to the dividend. On the ASX it is typically one business day after the ex-dividend date, because of T+2 settlement. You do not need to do anything on the record date; if you bought before the ex-date you are already on the register.
Do ETFs have an ex-dividend date?
+
Yes. ETFs have an ex-distribution date that works the same way. You need to be a unitholder before the ex-distribution date to receive that period's distribution. ETF distributions can bundle dividends, interest and capital gains from the underlying holdings.
Keep reading
Sources
This article is general information only, not financial or tax advice. It does not take into account your circumstances. Dividend rules and franking thresholds can change, and details here are indicative as of mid-2026. Check the ASX, the ATO, or a licensed adviser before acting on a specific dividend.
Was this article useful?
Put it to your own numbers
Every calculator runs entirely in your browser, with nothing stored. See what these numbers look like for your own situation.
Explore the calculators →General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
LinkedIn →Related articles
Do ETFs Pay Dividends?
Yes, ETFs pay income in Australia, called distributions. How they work, when they are paid, whether franking credits are included, and how to reinvest.
Blue Chip Shares Australia: The Beginner's Honest Guide
What are blue chip shares in Australia? What they are, why investors like them, their real risks, franking credits, and whether a broad ASX ETF might suit you better.
Dividend Investing in Australia: A Practical Beginner's Guide
How dividend investing works in Australia: dividends and yield, franking credits with a worked example, the yield trap, ETFs vs shares, DRPs, and who it suits.