A share is said to be trading cum-dividend when the payment of a dividend is due in the near future and investors who buy the share now will receive the dividend. Once the security goes ex-dividend buyers will not receive the dividend; it will go to the seller who held the shares immediately prior to their going ex-dividend.

When a dividend is paid, it is paid to holders who are on the register (the company's register of shareholders in the case of shares) on a particular date, called the record date. In order to be on the register of shareholders on the record date a buyer needs to purchase the shares early enough that the trade will be settled (i.e. the shares transferred to the buyer) by the record date.

When a share goes ex-dividend, the price will drop (other things being equal) by the amount of the dividend.

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