What does the 'ex-dividend date' signify for shareholders of a stock?

The 'ex-dividend date' is critical for shareholders because it marks the cutoff point for investors to be eligible to receive the declared dividend. To qualify for the dividend, an investor must purchase the stock before this date. If shares are bought on or after the ex-dividend date, the buyer will not receive the upcoming dividend. This date typically falls one business day before the record date, which is when the company assesses its shareholders to determine who will receive the dividend. Thus, understanding the significance of the ex-dividend date is essential for investors who want to ensure they receive the dividend payments associated with their stock holdings.