Ex-Dividend Date

The ex-dividend date is the day the right to receive a dividend disappears. Buy on or after it and you miss this payment, which is why the share opens lower by roughly the dividend amount.

Knowing the sequence prevents confusion. You must hold on the record date to receive the dividend, and because settlement takes days, the purchase must occur before that. The following day is the ex-dividend date.

The price drop on that day is not a loss. Value fell because cash left the company, and that cash arrives in your account as the dividend. The total is unchanged.

This is why collecting the dividend and selling immediately does not work. The share price has fallen by the same amount, and once tax is counted the strategy is worse than neutral.

How quickly the price recovers afterwards varies. Companies with solid earnings close the gap quickly, while shares bought purely for the dividend can stay depressed for a while. If you want the dividend, holding long beats buying just before the ex-date. After tax and trading costs, darting in and out leaves nothing.