When is the last day to buy a stock in order to qualify for the upcoming dividend?

To qualify for an upcoming dividend, an investor must purchase the stock before its ex-dividend date, commonly referred to as the ex-date. The ex-date is crucial because it marks the first day that the stock trades without the right to receive the declared dividend. If an investor buys the stock on or after this date, they will not receive the upcoming dividend, as the seller of the stock retains that right.

On the record date, the company determines which shareholders are eligible to receive the dividend. However, due to the typical T+2 settlement for stock trades (meaning the transaction settles two business days after the trade), buying the stock on the record date or later does not ensure that the buyer appears on the company’s record as a shareholder in time to receive the dividend. Therefore, to be eligible, the last day to buy the stock is actually the day before the ex-date.

Hence, the ex-date is the critical cutoff that allows investors to know when they must make their purchase to be recorded as a shareholder on the record date, thus qualifying for the dividend.