A dividend is part of a company’s profits that it pays to shareholders. The Board of Directors sets the amount. When a common or preferred share has an upcoming dividend, there are a few terms and dates you should be aware of:
- Cum dividend: If you buy shares cum dividend, it means you will receive the dividend – this happens if you purchase the shares before the ex-dividend date.
- Ex-dividend date: If you buy shares on or after the ex-dividend date, you will not receive the upcoming dividend. The ex-dividend date is two days before the record date.
- Record date: You must officially own a share on the record date to receive the upcoming dividend.
If you buy a share ex-dividend, you are still entitled to receive dividends, just not the upcoming declared dividend. Learn more about how stocks work.