Special dividend: a one-time payout, and the rule that changes its ex-date

What makes it special

A company’s regular dividend comes on a schedule, usually every quarter. A special dividend, also called an extra dividend, is paid outside that schedule (SEC, Investor.gov). It may come once, for example after the sale of part of the business, and nothing promises it will happen again.

The 25% rule for the ex-dividend date

For normal dividends the ex-dividend date is set from the record date: today they are usually the same business day. A very large dividend works differently. When the dividend is 25% or more of the stock’s value, the ex-dividend date is put off until one business day after the dividend is paid (FINRA Rule 11140, explained by the SEC).

The SEC’s own example: a dividend payable on Tuesday, March 17, 2026 would normally go ex earlier, but at 25% or more of the share price the ex-dividend date becomes Wednesday, March 18, 2026. Until then, anyone who sells the shares sells the right to the dividend along with them.

The price drop

With a large dividend the price tends to fall by about the dividend when the stock goes ex. A $10.00 special dividend on a $40.00 stock is 25% of its price; the shares would be expected to open near $30.00. You haven’t lost money: $10.00 in cash plus a $30.00 share is what you had before. See it for any dividend with the Ex-Dividend Price Drop Calculator.

How it’s taxed

A special cash dividend is taxed like a regular one: as an ordinary dividend, or at the lower qualified rate if it meets the rules, including the holding period. It shows on your Form 1099-DIV with your other dividends. Part of a distribution can also be a return of capital, which the company’s 1099-DIV shows in box 3.

In dividend history and yield

Leave special dividends out when you work out a stock’s regular yearly dividend or its yield; counting a one-time payment makes the stock look more generous than it is. On our popular dividend stock pages, special payments are marked and kept out of the yearly totals.