Dividends and the ex-dividend date
A dividend is a share of a company's profit paid to its owners. Who gets it is decided by one date: the ex-dividend date.
Getting paid for owning
Many established companies pay part of their profit to shareholders, often every three months. If a company pays $0.25 per share and you own 40 shares, you receive $10, usually straight into your broker account as cash.
The date that decides who gets it
The ex-dividend date is the cut-off. Own the share before that day and the dividend is yours, even if you sell on the day itself. Buy on or after it and the previous owner gets this one.
The money arrives later, on the payment date, often a few weeks after.
Why the price drops that morning
On the ex-dividend date the share usually opens lower by about the dividend: that money is leaving the company. A dividend isn't free money on top; it's part of your return, paid out.
Taxes held back
Countries often take tax from dividends before they reach you (withholding tax), for example 15% on US dividends for many foreign investors. Your broker's statement shows it; Allown counts what actually arrived.