Investing Trading What Is Adjusted Closing Price? By Robin Hartill Robin Hartill Robin Hartill is a Certified Financial Planner (CFP) who writes about money management, investing, and retirement planning. She has written and edited personal finance content since 2016. Robin currently leads The Penny Hoarder's personal finance advice column, "Dear Penny." Through this platform, Robin answers the questions of readers from across the United States. She decodes industry jargon, making complicated finance topics like paying taxes, managing a portfolio, and boosting a credit score easy to understand. learn about our editorial policies Updated on November 10, 2021 Reviewed by Akhilesh Ganti Reviewed by Akhilesh Ganti Website Akhilesh Ganti is a forex trading expert and registered commodity trading advisor who has more than 20 years of experience. He is directly responsible for all trading, risk, and money management decisions made at ArctosFX LLC. He has Master of Business Administration in finance from Mississippi State University. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Definition/Examples of Adjusted Closing Price How Adjusted Closing Price Works What It Means for Individual Investors Photo: JGI/Tom Grill / Getty Images Definition Adjusted closing price is the closing price adjusted for corporate actions such as dividend payouts, stock splits, or the issuance of more shares. Adjusted closing price is the closing price adjusted for corporate actions such as dividend payouts, stock splits, or the issuance of more shares. While the closing price of a stock tells you how much investors were paying for shares at the end of a trading day, the adjusted closing price gives you a more accurate representation of the stock’s value. Definition and Examples of Adjusted Closing Price When you look up historical data on a stock’s price, you’ll see both the closing price and the adjusted closing price for each trading day. The closing price simply tells you how much the stock was trading for at the end of any given trading day. The adjusted closing price updates that information to reflect events such as dividend payouts and stock splits. Because adjusted closing price accounts for information that isn’t included in the closing price, it’s considered a more accurate representation than closing price. However, it’s also more complicated to calculate and understand. Note Regular trading sessions in many U.S. markets run from 9:30 a.m. to 4 p.m. Eastern on weekdays. Many financial publications and market data providers list both the closing price at 4 p.m. and the last price during after-hours trading separately. How Adjusted Closing Price Works Often, the closing price and adjusted closing price will be the same for a trading day. But when certain events occur, like a substantial dividend or a stock split, these numbers can differ significantly. Here’s how you’d calculate adjusted closing price following a dividend distribution or stock split. Dividend Payments If a company announces a dividend payment, you’d subtract the amount of the dividend from the share price to calculate the adjusted closing price. Let’s say a company’s closing price is $100 per share and it distributes a dividend of $2 per share. You’d subtract the $2 dividend from the closing price of $100. The adjusted closing price is $98 per share. As an example, let’s look at Johnson & Johnson, which paid out a $1.06 dividend on May 24, 2021. Its closing price on May 21, 2021, was $170.96 per share but its adjusted closing price after accounting for the dividend payment was $169.90. Note When a company pays a dividend, you must be on the company’s records as a shareholder by a certain date (the “record date”) to receive the payment. Stock exchange rules require that you purchase the stock on or before the ex-dividend date, which is typically two business days before the record date. Stock Splits In a stock split, a company lowers its share price by splitting existing shares into multiple shares. Companies often split their stocks to make share prices more affordable to individual investors. The market capitalization, or the value of all the company’s outstanding shares, doesn’t change when a stock split occurs. Suppose a company’s shares sell for $40 and they undergo a 2-for-1 stock split. You’d use the split ratio, which is 2-to-1 in this case, to determine the adjusted closing value. You’d divide the $40 share price by 2 and multiply by 1 to get the adjusted closing value. If you owned a $40 share, you would own two $20 shares. The stock’s closing price would be $40, while its adjusted closing price would be $20. For example, Apple’s closing price on Aug. 28, 2020, was $499.23, when its stock split 4-1. But the adjusted closing price for the same date was $124.81. Note Rights offerings can lower a stock’s adjusting closing price because the offerings typically sell shares to existing stockholders at a lower price than the price at which the shares are trading. What It Means for Individual Investors Using a stock’s adjusted closing price is typically a better tool than the closing price for evaluating a stock over time. Going back to the Apple example, suppose you simply looked at the closing price in August 2020. You would conclude that Apple shares suddenly lost about 25% of their value, which, of course, wasn’t the case. By using adjusted closing value, you can more accurately calculate Apple’s returns and compare Apple to other securities. While calculating adjusted closing value may seem complicated, some stock-quote websites automatically calculate this number for you and include it in a stock’s historical data. Key Takeaways Adjusted closing price provides a more accurate snapshot of a stock’s value than the closing price because it accounts for factors such as dividend payouts, stock splits, and issuance of new shares.Use a stock’s split ratio to determine its adjusted closing value following a stock split. After a 2-for-1 stock split, the adjusted closing value would be half the closing value, although the company’s market capitalization would remain unchanged.To calculate adjusted closing price for dividend payments, subtract the dividend payment from the closing price. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Investor.gov. "Closing Price." Accessed June 25, 2021. Yahoo! Finance. "Johnson & Johnson (JNJ) Historical Data." Accessed June 25, 2021. Investor.gov. "Ex-Dividend Dates." Accessed June 25, 2021. Macrotrends. "Apple - 41 Year Stock Split History | AAPL." Accessed June 25, 2021. Apple Inc. "Stock Price." Accessed June 25, 2021.