What is 'XD'

XD is a symbol used to signify that a security is trading ex-dividend. It is an alphabetic qualifier that acts as shorthand to tell investors key information about a specific security in a stock quote. Sometimes X 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 services that provide stock quotes may use different qualifiers. 

Ex-dividend literally means "without the dividend."

BREAKING DOWN 'XD'

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 be lower as a result. There are quite a few qualifiers that relate to dividends. For example, j indicates that the stock paid a dividend earlier in the year 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 – the "ex-date" (or XD) and the record date.

An investor must be on the company's books as a shareholder to receive a dividend. Once the company sets the record date, the ex-dividend date is set. The ex-dividend date for stocks is usually set one business day before the record date. An investor who purchased shares before the ex-dividend date will get the upcoming dividend. If a purchase took place on or after the ex-dividend date, then the seller gets the dividend.

Companies also use the record date to determine who to send financial reports, proxy statements and other required information to.

Special Rules for Determining XD

If a dividend is 25 percent or more of the stock's value, then special rules will apply to determining the ex-dividend date. When this happens, the ex-dividend date is deferred until one business day after the dividend is paid.  

Sometimes a company pays a dividend in the form of stock rather than cash – either as additional shares in the company or in a subsidiary that is being spun off. Setting the ex-date for 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 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), the day you can sell your shares without being obligated to deliver the additional shares is "not the first business day after the record date, but usually is the first business day after the stock dividend is paid."

RELATED TERMS
  1. Payment Date

    A payment date is the date set by a company when it will issue ...
  2. Record Date

    The record date is the cut-off date, established by a company, ...
  3. Ex-Date

    The ex-date, or ex-dividend date, is the date on or after which ...
  4. Ex-Distribution

    Ex-distribution refers to a security or investment that trades ...
  5. Declaration Date

    The declaration date is the date on which a company announces ...
  6. Liquidating Dividend

    A liquidating dividend is a type of payment that a corporation ...
Related Articles
  1. Trading

    Understanding How Dividends Affect Option Prices

    Learn how the distribution of dividends on stocks impacts the price of call and put options, and understand how the ex-dividend date affects options.
  2. Investing

    Understanding Taxes on Mutual Funds Dividends

    Learn about the basics of mutual fund dividend taxation, including how and why mutual funds pay dividends and when different tax rates apply to dividend income.
  3. Investing

    Is Dividend Investing a Good Strategy?

    Understanding dividends and how they generate steady income for shareholders will help you become a more informed and successful investor.
  4. Financial Advisor

    How mutual funds pay dividends: An overview

    The process by which mutual fund dividends are calculated, distributed and reported is fairly straightforward in most cases. Here's a look.
  5. Financial Advisor

    Income tax on mutual funds: The basics

    Learn about the basics of income tax on mutual funds, including what types of income may be subject to the capital gains tax rate.
  6. Investing

    AAPL: Apple Dividend Analysis

    Apple's dividend has had healthy growth ever since its 2012 reinstatement, thanks to Apple's continuously rising revenue, earnings and operating cash flow.
  7. Investing

    3 Dividend Trends in the S&P 500 Index (TSN, LUV)

    Analyzing recent financial performance of companies demonstrating an inclination to issue consistent dividends to shareholders on a quarterly basis.
  8. Investing

    The Top 5 Dividend Paying Oil Stocks for 2016

    Discover the top five dividend-paying oil companies for 2016 and what factors contribute to their ability to continue dividend payments.
  9. Investing

    WMT: Wal-Mart Dividend Analysis

    Wal-Mart raised its dividend for the 43rd consecutive year, despite losing over 25% of its market value in 2015, and its dividend remains healthy in 2016.
RELATED FAQS
  1. How can I find out the ex-dividend date for a stock's dividend?

    Learn about the various information sources from which investors can obtain information about upcoming ex-dividend dates ... Read Answer >>
  2. If a company moves its dividend record date forward, does the ex-dividend date change ...

    When a dividend is declared, there are three important dates for investors: the dividend payable date, the dividend date ... Read Answer >>
  3. Why not buy just before the dividend, then sell?

    Buying a stock ahead of a dividend and selling right after usually doesn't work because the market often responds to dividend ... Read Answer >>
Trading Center