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Simple English definitions for legal terms
cum dividend
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A quick definition of cum dividend:
Term: Cum Dividend
Definition: When you buy a stock cum dividend, it means that you will receive any upcoming dividends that have been declared. This is different from buying a stock ex dividend, which means you will not receive the upcoming dividend payment. Basically, cum dividend means "with dividend."
A more thorough explanation:
Cum Dividend
Cum dividend means "with dividend". When a stock is purchased cum dividend, the buyer is entitled to any declared dividends that are pending. This is in contrast to ex dividend, where the buyer is not entitled to the upcoming dividend payment.
Example 1: John purchased 100 shares of XYZ company cum dividend. The company had declared a dividend of $0.50 per share, which meant that John would receive $50 in dividend payments.
Example 2: Sarah bought 50 shares of ABC company ex dividend. The company had declared a dividend of $0.25 per share, but since Sarah bought the shares after the ex dividend date, she was not entitled to the dividend payment.
These examples illustrate the difference between cum dividend and ex dividend. In example 1, John purchased the shares before the ex dividend date and was entitled to the dividend payment. In example 2, Sarah purchased the shares after the ex dividend date and was not entitled to the dividend payment.
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