SIE Ready✨ The big ideas of the SIE · Lesson 2 of 8 · 60 sec
T+1 and the Dividend Dates
Buy a stock on the wrong day and the dividend goes to the seller. One rule tells you which day matters.
💡 Key idea
Under T+1 settlement the ex-date equals the record date: buy before the ex-date to receive the dividend.
🧠 Why it matters
Since May 28, 2024, regular-way trades in stocks and most bonds settle T+1: one business day after the trade. To get a dividend you must be the owner of record on the record date, which means your trade must settle by then. Under T+1 the ex-dividend date is the same business day as the record date. Buy on the ex-date or later and the seller keeps the dividend; buy one business day before and it is yours. The order of the dates: Declaration, Ex, Record, Payable.
📈 In the real world
A company sets its record date for Thursday. Under T+1 the ex-date is also Thursday. Leo buys regular way on Wednesday; his trade settles Thursday and he gets the dividend. Ana buys Thursday, settles Friday, and does not.
📌 Takeaways
- Regular-way settlement has been T+1 since May 28, 2024
- Ex-date = record date under T+1; buying on the ex-date means no dividend
- Order of the dates: declaration, ex, record, payable
📖 Terms in this lesson
DERP (dividend dates): Declaration, Ex-date, Record, Payable: the order of dividend dates; under T+1 the ex-date and record date fall on the same day.
✅ Test yourself
A dividend's record date is Tuesday, March 9. Under T+1 settlement, what is the ex-dividend date?
- Tuesday, March 9
- Wednesday, March 10
- Friday, March 5
- Monday, March 8
Answer: A · Tuesday, March 9
With T+1 settlement the ex-date is the same business day as the record date, so it is Tuesday. Monday was the ex-date rule's answer under T+2, and Wednesday and Friday do not line up with either.
An investor buys a stock regular way on its ex-dividend date. Who receives the upcoming dividend?
- The buyer, since the trade settled
- Split pro rata by days held
- The seller of the shares
- The issuer keeps it as retained
Answer: C · The seller of the shares
Buying on or after the ex-date means the trade settles after the record date, so the seller is still owner of record and keeps the dividend. Dividends are not prorated by days held, and the issuer does not keep a dividend it has declared.
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