Ex-dividend

You must own a security by the record date the company sets to be entitled to the dividend it will pay on the payable date.

The period between those dates -- anywhere from a week to a month or more -- during which new investors in the security are not entitled to that dividend is called the ex-dividend period.

On the day the ex-dividend period begins, which is the first trade date that will settle after the record date, the stock is said to go ex-dividend.

Generally, the price of a stock rises in relation to the amount of the anticipated dividend as the ex-dividend date approaches. It drops back on the first day of the ex-dividend period to reflect the amount that is being paid out as dividend.