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Online Share Trading

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dividends

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olilau
Frequent Contributor
hi all am new to the investment scene and only have rudimentary knowledge on shares, so yes, i am taking the advice of many forumites who advise "read, read, read". can anyone tell me how the dividend policy works ? my understanding is that unless stated expressly to the contrary, shares are always sold "cum div", ie if i buy shares on the 27 feb and on 28 feb divs are declared, i am entitled to the entire dividend ? also, as a longterm investment i bought some STX40's when they were low. a dividend already got paid out, but how does that particular one (being basically an index) get calculated ? thanks in advance for help.
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4 REPLIES 4
Not applicable
well as long as you holding it on the last day to trade (LDT it's under key market statistics) you get the full amount. They usually declare a week or two before the LDT and then it's another odd week or so before they actually pay.
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olilau
Frequent Contributor
hmm. so if one buys a share a day before LDT, that would be ideal in theory. surely this must effect share price ?
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cfm
Super Contributor
You will find that the share price drops on day LDT+1 with the same amount as the declared dividend.
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KVW
Super Contributor
Usually the share price drops the next day by the same amount the Div paid. Look at WES a classic example where people lost a lot of money.
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