What Is XD?
XD聽is a聽symbol used to signify that a security is trading ex-dividend. It聽is an alphabetic qualifier that acts as shorthand to tell investors key information about a specific security in a stock quote. Sometimes X聽alone is used to indicate that the stock is trading ex-dividend. Qualifiers can vary depending on where the stock is quoted, because the various news and market data聽services that provide stock quotes may use different qualifiers. These symbol letters may occur as part of a display on a broker's trading platform, on a charting program or in a timely published report.
- XD is a symbol that appears as a footnote, subscript, superscript, or suffix to a ticker symbol on a trading platform or timely published report.
- It stands for Ex-dividend, which means "without the dividend."
- Stocks trading immediately past the dividend distribution may be lower in price, by the amount of the cash dividend payout, causing some investors concern until this is explained to them.
A dividend is a distribution of part of a company's earnings to the company's shareholders. When a stock is trading ex-dividend, the current stockholder has received a recent dividend payment and whoever purchases the stock will not receive the dividend. The stock's price is likely to聽be lower as a result. There are quite a few qualifiers that relate to dividends. For example, j聽indicates that the stock paid a dividend earlier in the year聽but currently does not carry a dividend.
Comparing XD With the Record Date
You'll need to look at two important dates to determine who should get a dividend鈥攖he聽"ex-date" (or XD) and the record date.
An investor must be on the company's books as a shareholder to receive a聽dividend. Once the company sets the record date, the ex-dividend date is set. The ex-dividend date for stocks is usually set聽one business day before聽the record date. An investor who purchased shares before the ex-dividend date will聽get the upcoming dividend.聽If a purchase took place on or after聽the ex-dividend date, then the seller gets the dividend.
Companies also use the record date to determine to whom to send financial reports, proxy statements and other required information.
Special Rules for Determining XD
If a聽dividend is 25 percent聽or more of the stock's value, then special rules will apply to determine聽the ex-dividend date.聽When this happens, the ex-dividend date is deferred until one business day after the dividend is paid.聽聽
Sometimes a company pays a dividend in the form of stock rather than cash鈥攅ither as聽additional shares in the company or in a subsidiary that is being spun off. Setting the ex-date for聽stock dividends may be different from cash dividends. It will be set the first business day after the stock dividend is paid (and is also after the record date).
Selling before the ex-dividend date聽includes an obligation to deliver any shares acquired as a result of the dividend to the buyer of your shares since the seller only receives an I.O.U. from their broker for the additional shares.
According to the Securities and Exchange Commission (SEC),聽the day you can sell your shares without being obligated to deliver the additional shares is "not聽the first business day after the record date, but usually is the first business day after the stock dividend is paid."