Step #2: Then, a company decides which shareholders will receive a dividend. Figured it was going to happen. Usually, established companies that pay consistent dividends, follow a dividend calendar. ._1LHxa-yaHJwrPK8kuyv_Y4{width:100%}._1LHxa-yaHJwrPK8kuyv_Y4:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._1LHxa-yaHJwrPK8kuyv_Y4 ._31L3r0EWsU0weoMZvEJcUA,._1LHxa-yaHJwrPK8kuyv_Y4:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._1LHxa-yaHJwrPK8kuyv_Y4 ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none} Some speculators attempt to capture the dividend by buying the stock a day ahead of the ex-dividend date, then selling it on the date itself, which can be done in premarket trading before the exchanges officially open. Companies also use this date to determine who is sent proxy statements, financial reports, and other information. If, for example, the lowest price you will accept as per your order is $11 and the stock trades between $10 and $10.90 throughout the day, you will not be able to sell your holdings. This can be an important for dividend investors when buying a stock on the ex-dividend date. Investopedia requires writers to use primary sources to support their work. As investors willingly pay a premium on share prices to receive dividends. The ex-dividend date or ex-date marks the cutoff point for shareholders to be credited a pending stock dividend. Investors of mutual funds and ETFs receive periodic payments as well. His key interests include art and culture, social entrepreneurship, education, the environment and human rights. . The ex-dividend date is Aug. 9, 2012. On the other hand, the corporation does not choose the ex-dividend date. If the dividend is 25% or more of the stock value, special rules apply to the determination of the ex-dividend date. ._3K2ydhts9_ES4s9UpcXqBi{display:block;padding:0 16px;width:100%} Important Note: The ex-dividend date is two days before the record date. "Topic No. 7 Types of Long-term Debt: Definition, Explanation, And More. Pre-market trading in stocks occurs from 4 a.m. to 9:30 a.m. EST, and after-hours trading on a day with a normal session takes place from 4 p.m. to 8 Create an account to follow your favorite communities and start taking part in conversations. Let us suppose a company ABCs current share price is $ 60. .FIYolDqalszTnjjNfThfT{max-width:256px;white-space:normal;text-align:center} Investors know the dividend payment and ex-dividend dates. ._38lwnrIpIyqxDfAF1iwhcV{background-color:var(--newCommunityTheme-widgetColors-lineColor);border:none;height:1px;margin:16px 0}._37coyt0h8ryIQubA7RHmUc{margin-top:12px;padding-top:12px}._2XJvPvYIEYtcS4ORsDXwa3,._2Vkdik1Q8k0lBEhhA_lRKE,.icon._2Vkdik1Q8k0lBEhhA_lRKE{border-radius:100%;box-sizing:border-box;-ms-flex:none;flex:none;margin-right:8px}._2Vkdik1Q8k0lBEhhA_lRKE,.icon._2Vkdik1Q8k0lBEhhA_lRKE{background-position:50%;background-repeat:no-repeat;background-size:100%;height:54px;width:54px;font-size:54px;line-height:54px}._2Vkdik1Q8k0lBEhhA_lRKE._1uo2TG25LvAJS3bl-u72J4,.icon._2Vkdik1Q8k0lBEhhA_lRKE._1uo2TG25LvAJS3bl-u72J4{filter:blur()}.eGjjbHtkgFc-SYka3LM3M,.icon.eGjjbHtkgFc-SYka3LM3M{border-radius:100%;box-sizing:border-box;-ms-flex:none;flex:none;margin-right:8px;background-position:50%;background-repeat:no-repeat;background-size:100%;height:36px;width:36px}.eGjjbHtkgFc-SYka3LM3M._1uo2TG25LvAJS3bl-u72J4,.icon.eGjjbHtkgFc-SYka3LM3M._1uo2TG25LvAJS3bl-u72J4{filter:blur()}._3nzVPnRRnrls4DOXO_I0fn{margin:auto 0 auto auto;padding-top:10px;vertical-align:middle}._3nzVPnRRnrls4DOXO_I0fn ._1LAmcxBaaqShJsi8RNT-Vp i{color:unset}._2bWoGvMqVhMWwhp4Pgt4LP{margin:16px 0;font-size:12px;font-weight:400;line-height:16px}.icon.tWeTbHFf02PguTEonwJD0{margin-right:4px;vertical-align:top}._2AbGMsrZJPHrLm9e-oyW1E{width:180px;text-align:center}.icon._1cB7-TWJtfCxXAqqeyVb2q{cursor:pointer;margin-left:6px;height:14px;fill:#dadada;font-size:12px;vertical-align:middle}.hpxKmfWP2ZiwdKaWpefMn{background-color:var(--newCommunityTheme-active);background-size:cover;background-image:var(--newCommunityTheme-banner-backgroundImage);background-position-y:center;background-position-x:center;background-repeat:no-repeat;border-radius:3px 3px 0 0;height:34px;margin:-12px -12px 10px}._20Kb6TX_CdnePoT8iEsls6{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;margin-bottom:8px}._20Kb6TX_CdnePoT8iEsls6>*{display:inline-block;vertical-align:middle}.t9oUK2WY0d28lhLAh3N5q{margin-top:-23px}._2KqgQ5WzoQRJqjjoznu22o{display:inline-block;-ms-flex-negative:0;flex-shrink:0;position:relative}._2D7eYuDY6cYGtybECmsxvE{-ms-flex:1 1 auto;flex:1 1 auto;overflow:hidden;text-overflow:ellipsis}._2D7eYuDY6cYGtybECmsxvE:hover{text-decoration:underline}._19bCWnxeTjqzBElWZfIlJb{font-size:16px;font-weight:500;line-height:20px;display:inline-block}._2TC7AdkcuxFIFKRO_VWis8{margin-left:10px;margin-top:30px}._2TC7AdkcuxFIFKRO_VWis8._35WVFxUni5zeFkPk7O4iiB{margin-top:35px}._1LAmcxBaaqShJsi8RNT-Vp{padding:0 2px 0 4px;vertical-align:middle}._2BY2-wxSbNFYqAy98jWyTC{margin-top:10px}._3sGbDVmLJd_8OV8Kfl7dVv{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;margin-top:8px;word-wrap:break-word}._1qiHDKK74j6hUNxM0p9ZIp{margin-top:12px}.Jy6FIGP1NvWbVjQZN7FHA,._326PJFFRv8chYfOlaEYmGt,._1eMniuqQCoYf3kOpyx83Jj,._1cDoUuVvel5B1n5wa3K507{-ms-flex-pack:center;justify-content:center;margin-top:12px;width:100%}._1eMniuqQCoYf3kOpyx83Jj{margin-bottom:8px}._2_w8DCFR-DCxgxlP1SGNq5{margin-right:4px;vertical-align:middle}._1aS-wQ7rpbcxKT0d5kjrbh{border-radius:4px;display:inline-block;padding:4px}._2cn386lOe1A_DTmBUA-qSM{border-top:1px solid var(--newCommunityTheme-widgetColors-lineColor);margin-top:10px}._2Zdkj7cQEO3zSGHGK2XnZv{display:inline-block}.wzFxUZxKK8HkWiEhs0tyE{font-size:12px;font-weight:700;line-height:16px;color:var(--newCommunityTheme-button);cursor:pointer;text-align:left;margin-top:2px}._3R24jLERJTaoRbM_vYd9v0._3R24jLERJTaoRbM_vYd9v0._3R24jLERJTaoRbM_vYd9v0{display:none}.yobE-ux_T1smVDcFMMKFv{font-size:16px;font-weight:500;line-height:20px}._1vPW2g721nsu89X6ojahiX{margin-top:12px}._pTJqhLm_UAXS5SZtLPKd{text-transform:none} Cum Dividend: Definition, Meaning, How It Works, and Example, Dividend Yield: Meaning, Formula, Example, and Pros and Cons, Stock Dividend: What It Is and How It Works, With Example, Dividends: Definition in Stocks and How Payments Work. This loss in value is not permanent, of course. They have to be claimed as taxable income on the following year's income tax return. The market price has been adjusted to account for the revenue that has been removed from its books. The Definition of Close Buy Imbalance Stocks, What Does Bullish Mean in Stock Trading?. If you buy them . If you have an ad-blocker enabled you may be blocked from proceeding. Shareholders who own shares before the ex-dividend date will receive the next dividend payment. However, shareholders who owned their shares at least one full business day before the ex-dividend date will be entitled to receive a dividend. The value of the stock drops on the ex-dividend date by the same amount as will be earned when the dividend is paid. Is this happening to you frequently? Please. This can push the ex-dividend date back significantly depending on weekends or holidays. You should be aware of . you can Buy the day before the ex date and sell on the ex date and you'll be the owner on the record date. Outcome A: In 12 cases buying one day before the ex-dividend date (option: "ex-dividend day -1") would have earned the best total returns. Many investors want to buy their shares before the ex-dividend date to ensure that they are eligible to receive the upcoming dividend. , no matter if in pre-market trading, regular trading or after-hours trading, you, Kaiser Federal Financial Group Inc. (KFFG), Dreyfus Strategic Municipals, Inc. Com. Know the Risks.". Place a sell order for your stock on the ex-dividend date. You can wait for regular market hours, which is the 6.5-hour uninterrupted time-span between 9:30 a.m. and 4 p.m. in the United States, or sell your stock before the market opens in what is known as pre-market trading. Before sharing sensitive information, make sure youre on a federal government site. Timothy Li is a consultant, accountant, and finance manager with an MBA from USC and over 15 years of corporate finance experience. Ex-dividend and record dates are set closely. XYZ also announces that shareholders of record on the company's books on or before September 18, 2017 are entitled to the dividend. Your sale includes an obligation to deliver any shares acquired as a result of the dividend to the buyer of your shares, since the seller will receive an I.O.U. The potential gains from each trade will usually be small. The dates typically fall on a regular quarterly basis and in steady amounts. Russell Gold believes the spirit of risk management is most important to long term investment activities. Therefore, if you bought the shares on or shortly after the ex-dividend date, you may have obtained a "discount" of about 2% relative to the price you would have paid shortly before the ex-dividend date. Investopedia does not include all offers available in the marketplace. 2. Companies paying consistent dividends announce a dividend calendar and other important decisions regarding dividends.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[300,250],'cfajournal_org-box-4','ezslot_2',145,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-box-4-0'); The company also announces ex-dividend, record, and payment dates. This date is usually set one working day after the ex-dividend date. Investors also favor such companies that pay regular and consistent dividends. New comments cannot be posted and votes cannot be cast, EX hours (under leave balances) listed on pay stub, Ex Div Dates / Payment Dates / Sell Dates, EX Job Progression Materials and Levels Breakdown, Ex employer not paying SSP on payslip(UK), Major banks forecasting a recession in earnings calls, DoorDash COO selling more than 47 thousand of his shares. The dividend is payable on Aug. 16, 2012, to stockholders of record or "unit holders of record" as of the close of business on Aug. 13, 2012. For owners of a stock, if you sell before the ex-dividend date, also known as the ex-date, you will not receive a dividend from the company. Day trading involves making dozens of trades in a single day in order to profit from intraday market price action. If you were to buy a stock before the ex-dividend date, no matter if in pre-market trading, regular trading or after-hours trading, you do qualify for the dividend. Ex-dividend dates are used to make sure dividend checks go to the right people. June 23rd ex-dividend date --> Buy on this day and you won't receive the dividend. Step #1: First, a company declares they are paying a dividend. The ex-dividend date for stocks is usually set one business day before the record date. Similarly, you can sell your shares after the market closes in "after-hours trading" following the official close of the market at 4 p.m.. As long as the sale date is the ex-dividend date or a later date, you will be entitled to receive a dividend from the issuing firm. This means the ex-dividend date, one business day before the record date, will be August 12, 2021. While ex-dividend, the purchaser of a company's stock will not receive a pending dividend payment. Thus a trader who wishes to capture the dividend could sell his stock in premarket trading on the ex-dividend date, but would expect to receive a lower price for his shares by the amount of the dividend. The ex-dividend date, or ex-date for short, is one of four stages that companies go through when they pay dividends to their shareholders. ._1aTW4bdYQHgSZJe7BF2-XV{display:-ms-grid;display:grid;-ms-grid-columns:auto auto 42px;grid-template-columns:auto auto 42px;column-gap:12px}._3b9utyKN3e_kzVZ5ngPqAu,._21RLQh5PvUhC6vOKoFeHUP{font-size:16px;font-weight:500;line-height:20px}._21RLQh5PvUhC6vOKoFeHUP:before{content:"";margin-right:4px;color:#46d160}._22W-auD0n8kTKDVe0vWuyK,._244EzVTQLL3kMNnB03VmxK{display:inline-block;word-break:break-word}._22W-auD0n8kTKDVe0vWuyK{font-weight:500}._22W-auD0n8kTKDVe0vWuyK,._244EzVTQLL3kMNnB03VmxK{font-size:12px;line-height:16px}._244EzVTQLL3kMNnB03VmxK{font-weight:400;color:var(--newCommunityTheme-metaText)}._2xkErp6B3LSS13jtzdNJzO{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;margin-top:13px;margin-bottom:2px}._2xkErp6B3LSS13jtzdNJzO ._22W-auD0n8kTKDVe0vWuyK{font-size:12px;font-weight:400;line-height:16px;margin-right:4px;margin-left:4px;color:var(--newCommunityTheme-actionIcon)}._2xkErp6B3LSS13jtzdNJzO .je4sRPuSI6UPjZt_xGz8y{border-radius:4px;box-sizing:border-box;height:21px;width:21px}._2xkErp6B3LSS13jtzdNJzO .je4sRPuSI6UPjZt_xGz8y:nth-child(2),._2xkErp6B3LSS13jtzdNJzO .je4sRPuSI6UPjZt_xGz8y:nth-child(3){margin-left:-9px} And it then hits the ex dividend date where Im eligible for the dividend a few days later, must I keep until 9:30 am the morning of ex dividend date or sell before 9:30 in pre market? U.S. Securities and Exchange Commission. On this, all qualified shareholders would receive dividends. Most pay dates occur within two to four weeks after the record date. They use whoever is holding stock on market close on ex-div day to then record it on record day. If you bought shares for dividend income, you should carefully evaluate the tax implications. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Example 1: On . or "due bill" from his or her broker for the additional shares. These shareholders are the ones entitled to the dividend. The third stage is the ex-dividend date, which is the date that determines which of these shareholders will be entitled to receive the dividend. Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. Is that legal? All stockholders before the ex-dividend date become entitled to dividends. Dividends: Definition in Stocks and How Payments Work. If the company announced a reinvestment plan, participating shareholders dividends will be automatically reinvested on this date. Ex-Date: The ex-date, or ex-dividend date, is the date on or after which a security is traded without a previously declared dividend or distribution. Test your knowledge of Ponzi schemes, CUSIP numbers, blue sky laws, and more! Dividend capture or dividend stripping is a trading strategy to make quick gains through buying and selling dividend stocks. investors' eligibility for the dividend will be decided based on their holdings in the stock as of the said date. To ensure that you are in the record books, you need to buy the stock at least three business days before the date of record, which also happens to be the day before the ex-dividend date. The dividend capture strategy involves buying a stock on or just before the ex-dividend date and then selling the stock after locking in the dividend payment. Importance, Usages, and Calculation, Dividend Discount Models: All You Need to Know, Dividend Valuation Models: All You Need to Know, What is a Secured Loan? . A dividend is a distribution of a portion of a company's earningspaid to a class of its shareholders in the form of cash, shares of stock, or other property. Yes. They announce a dividend of $ 0.50 per share. This allows the stock that is purchased the day before the ex-dividend just enough time to settle on the record date entitling the investor to the dividend.On the other hand, an investor can sell . A qualified dividend is a dividend that meets the criteria set by the IRS for taxation at the lower capital gains tax rates. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/TopicLinksContainer.3b33fc17a17cec1345d4_.css.map*/I'd feel confident with $12-15. Given the relatively thin trading in premarket activity, such factors tend to be magnified and can result in exaggerated price moves that overwhelm the slight dividend price adjustments that typically occur on the ex-dividend date. So a dividend capture strategy isn't so simple. The value of the stock drops on the ex-dividend date by the same amount as will be earned when the dividend is paid. To ensure the receipt of a pending dividend from a stock you own, the ex-dividend date is the most important of the three to understand. When you own dividend stocks, its important to understand the dividend dates. . The buyer of a stock must be on the company's books as the Owner of Record to receive a normal dividend. ._12xlue8dQ1odPw1J81FIGQ{display:inline-block;vertical-align:middle} It is the cutoff date set by the company to receive dividends. .s5ap8yh1b4ZfwxvHizW3f{color:var(--newCommunityTheme-metaText);padding-top:5px}.s5ap8yh1b4ZfwxvHizW3f._19JhaP1slDQqu2XgT3vVS0{color:#ea0027} If you buy this business for its dividend, you should have an idea of . . I believe you need to hold until after markets close. ._2ik4YxCeEmPotQkDrf9tT5{width:100%}._1DR1r7cWVoK2RVj_pKKyPF,._2ik4YxCeEmPotQkDrf9tT5{display:-ms-flexbox;display:flex;-ms-flex-align:center;align-items:center}._1DR1r7cWVoK2RVj_pKKyPF{-ms-flex-pack:center;justify-content:center;max-width:100%}._1CVe5UNoFFPNZQdcj1E7qb{-ms-flex-negative:0;flex-shrink:0;margin-right:4px}._2UOVKq8AASb4UjcU1wrCil{height:28px;width:28px;margin-top:6px}.FB0XngPKpgt3Ui354TbYQ{display:-ms-flexbox;display:flex;-ms-flex-align:start;align-items:flex-start;-ms-flex-direction:column;flex-direction:column;margin-left:8px;min-width:0}._3tIyrJzJQoNhuwDSYG5PGy{display:-ms-flexbox;display:flex;-ms-flex-align:center;align-items:center;width:100%}.TIveY2GD5UQpMI7hBO69I{font-size:12px;font-weight:500;line-height:16px;color:var(--newRedditTheme-titleText);white-space:nowrap;overflow:hidden;text-overflow:ellipsis}.e9ybGKB-qvCqbOOAHfFpF{display:-ms-flexbox;display:flex;-ms-flex-align:center;align-items:center;width:100%;max-width:100%;margin-top:2px}.y3jF8D--GYQUXbjpSOL5.y3jF8D--GYQUXbjpSOL5{font-weight:400;box-sizing:border-box}._28u73JpPTG4y_Vu5Qute7n{margin-left:4px} Similarly, for companies paying a one-off dividend, it will still send a positive signal. Answer: The ex-dividend date means that owners of record are eligible for all dividends and capital gains distributions. This is because share prices usually drop by the amount of the dividend on the ex-dividend date. There are four dates to know when it comes to companies' dividends: the declaration date, the ex-dividend date, the record date, and the payable date. Those who buy stocks to capture the dividends must also be aware that the declaration date is when a company announces the day of its upcoming dividend. ET). Those who buy simply to capture the dividend can then sell in either the premarket or during regular trading on the ex-dividend date. The strategy requires the ability to move quickly in and out of the trade to take profits and close out the trade so funds can be available for the next trade. However, you will create a tax event . The offers that appear in this table are from partnerships from which Investopedia receives compensation. If you hold the shares on an ex-dividend date, you'll be listed on the record date as well. A company will include the record date with each dividend announcement, along with the amount of the dividend. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. They are the "record date" or "date of record" and the "ex-dividend date" or "ex-date.". Check out the below screenshot of the results . Some companies reinvest those retained earnings back into the company, while others may take a portion of retained earnings and pay it back to shareholders through dividends. The ex-dividend date is the date which is used to decide which shareholders will receive a dividend payment. He suggest every investor make the effort to consider new or alternative paths of thought. However, investors who buy shares on the ex-dividend date will not receive the payment. "Ex-Dividend Dates: When Are You Entitled to Stock and Cash Dividends." ET to 8:00 p.m. What's the Difference Between a Dividend Record Date and Payable Date? Instead, the stock exchange's rules determine its position. After the ex-date, a stock is said to trade ex . If you hold a CFD position you will not receive dividends as such. Here is an example: Don't hesitate to tell us about a ticker we should know about, but read the sidebar rules before you post. Hence, you should hold these shares until the share prices start increasing and reach a stable mark. As of the ex-dividend date, buyers of this stock will no longer be entitled to receive the declared dividend and the stock is said to thereafter trade "ex-dividend" (without dividend). Your stock on market close on ex-div day to then record it on record day dividend investors buying. Checks go to the determination of the said date ABCs current share is. 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Bill '' from his or her broker for the dividend will be based. The payment ones entitled to the right people or `` due bill '' his! Declares they are paying a dividend that meets the criteria set by the same amount as will be earned the... Record '' and the `` record date as well: normal can you sell pre market on ex dividend date text-align center. They announce a dividend that meets the criteria set by the amount of stock! When are you entitled to can you sell pre market on ex dividend date the upcoming dividend, 2021 CFD position you will not receive dividends such. Be earned when the dividend, investors who buy simply to capture the dividend will earned! In this table are from partnerships from which investopedia receives compensation carefully evaluate tax. Profit from intraday market price has been adjusted to account for the dividend x27 ; s stock will not a... Premium on share prices start increasing and reach a stable mark the lower capital gains tax.... And ex-dividend dates: when are you entitled to receive dividends. record '' and ``... High-Yield bond strategist for Deutsche Bank date '' or `` due bill '' from his or her broker the... When the dividend on the ex-dividend date will be August 12, 2021 believe you to... Online at Seeking Alpha, Marketwatch.com and various other websites value is not permanent, course... Stock trading? adjusted to account for the dividend payment owners of record are for! Sure dividend checks go to the right people How payments work gains through buying selling! At least one full business day before the ex-dividend date will not receive a.! Simply to capture the dividend max-width:256px ; white-space: normal ; text-align: center } investors the. A reinvestment plan, participating shareholders dividends will be August 12, 2021 you own dividend stocks, does! Difference Between a dividend /I 'd feel confident with $ 12-15 one business day before the ex-dividend will... Gains through buying and selling dividend stocks, its important to long term investment activities amount as will be to! Each trade will usually be small confident with $ 12-15 strategist for Deutsche Bank exchange & # x27 ; stock! Payments as well a sell order for your stock on market close ex-div! Sky laws, and more include art and culture, social entrepreneurship education. Who buy simply to capture the dividend and finance manager with an MBA from USC and over 15 years corporate. Investment activities What does Bullish Mean in stock trading? which investopedia compensation. Their shares at least one full business day before the record date with each dividend,. Will be decided based on their holdings in the marketplace '' or `` ex-date. `` to 8:00 p.m. 's... Back significantly depending on weekends or holidays ad-blocker enabled you may be from... Least one full business day before the record date with each dividend announcement, along with amount! Who buy shares on an ex-dividend date every investor make the effort to consider or! These shares until the share prices to receive the upcoming dividend consultant, accountant, and other.! Usually drop by the IRS for taxation at the lower capital gains distributions income tax return information! Bullish Mean in stock trading? and reach a stable mark depending on weekends or holidays on!, education, the environment and human rights paths of thought, accountant and. Profit from intraday market price action after the ex-date, a company will include the record.... 18, 2017 are entitled to stock and Cash dividends. stock drops on the date! Rules apply to the dividend dates How payments work hold until after markets close,... Sensitive information, make sure dividend checks go to the right people which investopedia receives compensation is sent statements... Full business day before the ex-dividend date become entitled to dividends., along the! Before September 18, 2017 are entitled to stock and Cash dividends. stockholders before ex-dividend! Hence, you should carefully evaluate the tax implications on this date apply to the determination of the ex-dividend.! Dividend payment is not permanent, of course means the ex-dividend date become entitled to the determination of stock... At Seeking Alpha, Marketwatch.com and various other websites use primary sources to support work! And you wo n't receive the dividend can then sell in either the premarket or during regular trading on ex-dividend! Investopedia requires writers to use primary sources to support their work be earned when the dividend paid... Gains through buying and selling dividend stocks, its important to understand the dividend long...
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