What is the primary purpose of the Ex-Dividend date?

The primary purpose of the Ex-Dividend date is to establish which shareholders are eligible for dividends. This date is critically important because it determines who will receive the declared dividend. When a stock goes ex-dividend, it means that anyone who purchases the stock on or after this date will not receive the upcoming dividend payment. Instead, only those who owned the stock before the ex-dividend date will be entitled to receive the dividend. This creates a clear cut-off point for dividend eligibility and ensures that the company can efficiently allocate its dividends to the rightful shareholders. Shareholders must be aware of the ex-dividend date to manage their investments effectively and make informed decisions about buying or selling the stock around that time.