Microsoft Corporation Dividends

What is a Dividend Date

When we talk about a dividend date, we’re referring specifically to the ex-dividend date.

This is the date on which all stockholders will earn a dividend. Technically, a person needs to be the owner of a share of stock as of the night before the ex-dividend date in order to earn the dividend.

The ex-dividend date is different than the date when the dividend is issued. Although you earn a dividend on the ex-dividend date, that dividend is typically not disbursed to your account until several weeks later.

Most brokerages will automatically credit the dividend to your account once it’s issued.

Historical Dividends for Microsoft Corporation (MSFT)

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Owning Microsoft Corporation Stock on the Dividend Date

If you own Microsoft Corporation stock on the ex-dividend date, then you earn the associated dividend.

Theoretically, the price of Microsoft Corporation stock should go down by the amount of the dividend (in addition to any other pressures that market forces have on the price of Microsoft Corporation stock).

Therefore, it is typically not expected that there is any incremental profit to be gained from buying Microsoft Corporation stock right before the ex-dividend date and then selling it immediately after. It’s not like you get the Microsoft Corporation dividend payout for free just by doing that since there is typically an equivalent commensurate drop in the stock price.

Owning Microsoft Corporation Options on the Dividend Date

Unlike the stock price, which will normally have an abrupt decrease by the amount of the dividend on the ex-dividend date, option prices typically do not reflect the same phenomenon.

The reason is that in the time leading up to the ex-dividend date, that projected drop in Microsoft Corporation stock price from the dividend is already baked into Microsoft Corporation option prices.

That means the prices of call options that overlap the Microsoft Corporation ex-dividend date typically go down in the period leading up to the ex-dividend date.

The prices of put options that overlap the Microsoft Corporation ex-dividend date typically go up in the period leading up to the ex-dividend date.

Owners of Microsoft Corporation call options do not receive the dividend, even if they own the options on the ex-dividend date. Owners of Microsoft Corporation put options are not responsible to pay the dividend, even if they own the options on the ex-dividend date.

Learning More Microsoft Corporation Dividends

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