How to Calculate Stock Price After Dividend

by D. Laverne O'Neal

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.