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How to Calculate Stock Price After Dividend

Original post by D. Laverne O'Neal of Demand Media

The day a dividend is approved by a corporation's board of directors, the amount of the dividend becomes a liability in accounting terms. At the end of the trading day, the stock price is adjusted to account for the dividend payout, and the new price is termed the ex-dividend price. The ex-dividend price is the closing stock price reduced by the price per share of the cash dividend. Performing the calculation is relatively straightforward.

Cash Dividend

Step 1

Find the price of the stock at the close of the trading day. For example, assume a stock with a price of $50 a share.

Step 2

Find out the value of the cash dividend paid out. Assume for the purposed of this example, that the per-share cash dividend is $2.

Step 3

Deduct the dividend amount from the stock's closing price. In this example, $50 minus $2 equals $48. The adjusted price of the stock is $48.

                   

Things Needed

  • Calculator

References

About the Author

D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, health, personal finance and personal growth.

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