"Thinking of Day Trading? This can be a risky plan since the market typically prices in dividends. ._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} 7 Types of Long-term Debt: Definition, Explanation, And More. .Rd5g7JmL4Fdk-aZi1-U_V{transition:all .1s linear 0s}._2TMXtA984ePtHXMkOpHNQm{font-size:16px;font-weight:500;line-height:20px;margin-bottom:4px}.CneW1mCG4WJXxJbZl5tzH{border-top:1px solid var(--newRedditTheme-line);margin-top:16px;padding-top:16px}._11ARF4IQO4h3HeKPpPg0xb{transition:all .1s linear 0s;display:none;fill:var(--newCommunityTheme-button);height:16px;width:16px;vertical-align:middle;margin-bottom:2px;margin-left:4px;cursor:pointer}._1I3N-uBrbZH-ywcmCnwv_B:hover ._11ARF4IQO4h3HeKPpPg0xb{display:inline-block}._2IvhQwkgv_7K0Q3R0695Cs{border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._2IvhQwkgv_7K0Q3R0695Cs:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B{transition:all .1s linear 0s;border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._1I3N-uBrbZH-ywcmCnwv_B:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B.IeceazVNz_gGZfKXub0ak,._1I3N-uBrbZH-ywcmCnwv_B:hover{border:1px solid var(--newCommunityTheme-button)}._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk{margin-top:25px;left:-9px}._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:focus-within,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:hover{transition:all .1s linear 0s;border:none;padding:8px 8px 0}._25yWxLGH4C6j26OKFx8kD5{display:inline}._2YsVWIEj0doZMxreeY6iDG{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-metaText);display:-ms-flexbox;display:flex;padding:4px 6px}._1hFCAcL4_gkyWN0KM96zgg{color:var(--newCommunityTheme-button);margin-right:8px;margin-left:auto;color:var(--newCommunityTheme-errorText)}._1hFCAcL4_gkyWN0KM96zgg,._1dF0IdghIrnqkJiUxfswxd{font-size:12px;font-weight:700;line-height:16px;cursor:pointer;-ms-flex-item-align:end;align-self:flex-end;-webkit-user-select:none;-ms-user-select:none;user-select:none}._1dF0IdghIrnqkJiUxfswxd{color:var(--newCommunityTheme-button)}._3VGrhUu842I3acqBMCoSAq{font-weight:700;color:#ff4500;text-transform:uppercase;margin-right:4px}._3VGrhUu842I3acqBMCoSAq,.edyFgPHILhf5OLH2vk-tk{font-size:12px;line-height:16px}.edyFgPHILhf5OLH2vk-tk{font-weight:400;-ms-flex-preferred-size:100%;flex-basis:100%;margin-bottom:4px;color:var(--newCommunityTheme-metaText)}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX{margin-top:6px}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._3MAHaXXXXi9Xrmc_oMPTdP{margin-top:4px} Dividend announcements and changes can impact stock prices as well. Place a sell order for your stock on the ex-dividend date. Thus, youll receive the dividend amount even if you sell the shares immediately.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[300,250],'cfajournal_org-large-mobile-banner-1','ezslot_6',149,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-large-mobile-banner-1-0'); You should consider the share price movement before selling a share with an ex-dividend. Because markets typically discount the price of a stock by a corresponding amount after shareholders can no longer receive the dividend. ._2a172ppKObqWfRHr8eWBKV{-ms-flex-negative:0;flex-shrink:0;margin-right:8px}._39-woRduNuowN7G4JTW4I8{margin-top:12px}._136QdRzXkGKNtSQ-h1fUru{display:-ms-flexbox;display:flex;margin:8px 0;width:100%}.r51dfG6q3N-4exmkjHQg_{font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;-ms-flex-pack:justify;justify-content:space-between;-ms-flex-align:center;align-items:center}.r51dfG6q3N-4exmkjHQg_,._2BnLYNBALzjH6p_ollJ-RF{display:-ms-flexbox;display:flex}._2BnLYNBALzjH6p_ollJ-RF{margin-left:auto}._1-25VxiIsZFVU88qFh-T8p{padding:0}._2nxyf8XcTi2UZsUInEAcPs._2nxyf8XcTi2UZsUInEAcPs{color:var(--newCommunityTheme-widgetColors-sidebarWidgetTextColor)} investors' eligibility for the dividend will be decided based on their holdings in the stock as of the said date. 16, 2022: A previous version of this article misstated when the ex-dividend date falls relative to the record date. Essentially, the investor would likely break even due to the decrease in stock value after the ex-dividend date. Initially, the stock price of a company will increase with a dividend declaration. For example, if a trader were to buy Apple stock before Wednesday, Aug. 8, 2012, 8:00 p.m. (after hours), he or she would receive Apple's $2.65 dividend, payable Aug. 16, 2012. Thus, a share price will likely be impacted by a dividend decision. While the ex-dividend date is largely determined by the legal and market requirements for stock transactions, these things can be case specific. Record Date. It is the ex-dividend date that determines which investor, the buyer or seller, receives the dividend. The ex-dividend date is typically one business day before the dividend record date. http://www.nasdaqtrader.com/TraderNews.aspx?id=ECA2021-108, Does this mean we can sell today and get the dividend? That's what "ex-date" means. If an established company announces a dividend with an inflation-adjusted rate, it will send a positive signal to the stock market. He has been quoted in publications including "Financial Times" and the "Wall Street Journal." ET to 8:00 p.m. Yes. On the ex-dividend date, stock prices typically decline by the amount of the dividend. Shareholders must be on the companys record lists on this date to receive dividends. As we discussed earlier, a dividend stripping strategy doesnt always work. The 'cum dividend' status is like a notice to investors. Alternatively, investors may want to sell the stock they own but still receive a declared dividend. ._3bX7W3J0lU78fp7cayvNxx{max-width:208px;text-align:center} . The second stage is the record date, which is when the company examines its current list of shareholders to determine who will receive dividends. The .gov means its official. 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? Please. In the above example, the ex-dividend date for a stock thats paying a dividend equal to 25% or more of its value, is October 4, 2017. If you purchase before the ex-dividend date, you get the dividend. ", Internal Revenue Service. You can then sell the shares at any point after the market opens on the ex-dividend date and still receive the dividend payment. Not sure on this specific case but ex-dividend basically means post-dividend. I know the stock is supposed to drop by the amount of the dividend, but Ive observed many cases where it didnt. If you hold the shares on an ex-dividend date, youll be listed on the record date as well. Types, Advantages, and Disadvantages, What Is A Bank Guarantee? The ex-dividend date for stocks is usually set one business day before the record date. If you were to buy on or after the ex-dividend-date, whether in pre-market trading, . If you are not on Apple record books on the date of record, you will not receive the dividend payment. ._3-SW6hQX6gXK9G4FM74obr{display:inline-block;vertical-align:text-bottom;width:16px;height:16px;font-size:16px;line-height:16px} Others like to sell the day before ex-date (the last possible day where the buyer of the shares will still be "paying for" the upcoming dividend) with the idea to try and maximize capital gain. They use whoever is holding stock on market close on ex-div day to then record it on record day. This makes sense because the company's assets will soon be declining by the amount of the dividend. "Topic No. Read More: The Lowdown on Using Forex Apps for Beginners. Dividend arbitrage is an options trading strategy that involves purchasing puts and stock before the ex-dividend date and then exercising the put. Many investors look to make quick profits with changes in stock prices around the ex-dividend date through dividend capture. 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. The record date for the dividends totalling 75 per share is 17 January, 2023, i.e. You should consider the share price movement before selling a share with an ex-dividend. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy. Because day traders attempt to profit from small, short-term price movements, it's difficult to earn large sums with this strategy without starting off with large amounts of investment capital. Thus, you'll receive the dividend amount even if you sell the shares immediately. If you buy shares on or after the ex-dividend date, you won't . 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. TRCH will be ending and selling all of their assets for a dividend payment. This price change prevents a trader from profitably buying shares just before a stock goes ex-dividend and then selling on the ex-dividend date with a plan to profit from the dividend received. Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. If the shareholder sells a "cum . As an example, consider the following sentence: "On April 26, 2016, Wells Fargo declared a dividend of $0.38 per share, payable on June 1 . Another area of confusion about ex-dividend dates is how pre-market and after-hour trading influences dividends. Thus, on an ex-dividend date, the stock prices will fall by the dividend amount. Mutual Funds and Exchange-Traded Funds (ETFs), Public Service Campaign (new) Investomania, Pay Off Credit Cards or Other High Interest Debt, Stock Purchases and Sales: Long and Short, Publicly Traded Business Development Companies (BDCs), Smart Beta, Quant Funds and other Non- Traditional Index Funds, Structured Notes with Principal Protection, Researching the Federal Securities Laws Through the SEC Website, The Laws That Govern the Securities Industry. 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. The potential gains from each trade will usually be small. Its not always logical. Dividends: Definition in Stocks and How Payments Work. Would I be able to sell on the 23rd and still get the dividend (T+2 settlement would clear the sell on the 25th)? As an investor, you should consider the broader context of dividend announcement. Thereby, if a record date is set on 18th February, the ex-dividend date would be on 16th February. No, you will not get the dividend. Investors also favor such companies that pay regular and consistent dividends. With derivative investment strategies, it is possible to double your money in less than week. So if the stock were trading for $100 per share and would be paying a $1 quarterly dividend, the price will fall to about $99 on the ex-dividend date. Is the Robinhood App Safe? That means they can sell their shares on the ex-dividend date and still receive the dividend. When a company declares a dividend, it sets a record date when you must be on the company's books as a shareholder to receive the dividend. The share prices usually fall by the dividend amount on the ex-dividend date to reflect the detachment of the dividend. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. 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. The stock dividend may be additional shares in the company or in a subsidiary being spun off. The stock can be sold any time after the market opens on the ex-dividend day and the dividend will still be deposited in the investor's account on the dividend payment date. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date). What do you think are the best long-term investment Are there legitimate, unbiased investment coaches Press J to jump to the feed. Any investors who purchase the stock or ETF before the ex-date is entitled to its dividend. On the other hand, the corporation does not choose the ex-dividend date. 05/05/2023. 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 The value of the stock drops on the ex-dividend date by the same amount as will be earned when the dividend is paid. But, for example, a $50 stock with a $1/qtr dividend will open on ex-div day at $49. Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. ", U.S. Securities and Exchange Commission. This is the date the company declares the dividend. Acting as shorthand to tell investors key information about a specific security, XD is a symbol signifying that a security is trading ex-dividend. It is a share of the company's profits and a reward to its investors. In order to receive the dividend you must own the stock by the close of market on the day before the ex-dividend date. The date of record for shareholders on the company's books is August 13, 2021. In . Rather, you have to understand the difference between the ex-dividend date, the record date and the payment date. To collect a dividend from a short-term stock investment, the shares must be held until the share price recovers to at least the value on the day . Ex-Dividend Date or Ex-date. Investopedia requires writers to use primary sources to support their work. Step #1: First, a company declares they are paying a dividend. They announce a dividend of $ 0.50 per share. On a quiet trading day the stock price of a dividend-paying corporation would typically trade at a lower price on the ex-dividend date. It may work counter-intuitively for many investors. Put another way, if you owned ANZ shares before the ex-dividend date, you get paid said dividend. 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. Yet if a trader were to sell Apple shares on or before the ex-dividend date, Aug. 8, 2012, he or she does not qualify for the dividend. If you hold a CFD position you will not receive dividends as such. Ex-Dividend Date - once the record date is set the stock market will automatically set the ex-dividend date. Yeah - that's what I have always thought. At the same time, those who purchase before the ex-dividend date on Friday will receive the dividend. (Formula, Example, Calculation, and More). Timothy Li is a consultant, accountant, and finance manager with an MBA from USC and over 15 years of corporate finance experience. How long do you The value of the stock will fall by an amount roughly corresponding to the total amount paid in dividends. I'm sure some of you know of the situation with TRCH. A stock's Ex-Dividend Date (also known as ex-div date or ex date) is the first day the stock trades without the dividend. Disclaimer: Dividend dates and payouts are always subject to change. The offers that appear in this table are from partnerships from which Investopedia receives compensation. On the ex-dividend open, the stock will be at $24. A dividend is typically a cash payment that a company pays to its shareholders as a reward for investing in its stock or equity shares. The ex-dividend date is the first day on which a shareholder can sell her stock without losing her dividend rights.You can usually find the ex-dividend date by searching for past news about your stock on a finance portal, such as Yahoo Finance or Google Finance. Even if you sell your shares on or after the ex-divident date you . 1.20. For many investors, dividends are a major point of stock ownership. As the ex-dividend date becomes closer, more buyers time their purchases to receive the dividend, thus creating additional demand and driving up the stock price. ._3K2ydhts9_ES4s9UpcXqBi{display:block;padding:0 16px;width:100%} ._3Z6MIaeww5ZxzFqWHAEUxa{margin-top:8px}._3Z6MIaeww5ZxzFqWHAEUxa ._3EpRuHW1VpLFcj-lugsvP_{color:inherit}._3Z6MIaeww5ZxzFqWHAEUxa svg._31U86fGhtxsxdGmOUf3KOM{color:inherit;fill:inherit;padding-right:8px}._3Z6MIaeww5ZxzFqWHAEUxa ._2mk9m3mkUAeEGtGQLNCVsJ{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;color:inherit} We have three key dates regarding dividends. 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. A company will include the record date with each dividend announcement, along with the amount of the dividend. The ex-dividend date for stocks is usually set one business day beforethe record date. For example, a stock closes at $50 per share two days before the record date of a $1.00 dividend payment. If you sold shares before the ex-dividend date no matter if in pre-market trading, regular trading or after-hours trading, you will not qualify for the dividend. Of course, this example exaggerates the reality of the smoothness of markets. With very little capital Russell Gold utilizes advanced investment strategies as an ability to make extreme returns. ._2Gt13AX94UlLxkluAMsZqP{background-position:50%;background-repeat:no-repeat;background-size:contain;position:relative;display:inline-block} The ex-dividend date is Aug. 9, 2012. If the shareholders sell any of these shares on or after September 7, 2021, they will still receive the dividends. .ehsOqYO6dxn_Pf9Dzwu37{margin-top:0;overflow:visible}._2pFdCpgBihIaYh9DSMWBIu{height:24px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu{border-radius:2px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:focus,._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:hover{background-color:var(--newRedditTheme-navIconFaded10);outline:none}._38GxRFSqSC-Z2VLi5Xzkjy{color:var(--newCommunityTheme-actionIcon)}._2DO72U0b_6CUw3msKGrnnT{border-top:none;color:var(--newCommunityTheme-metaText);cursor:pointer;padding:8px 16px 8px 8px;text-transform:none}._2DO72U0b_6CUw3msKGrnnT:hover{background-color:#0079d3;border:none;color:var(--newCommunityTheme-body);fill:var(--newCommunityTheme-body)} However, if a trader were to buy Apple stock on or after the ex-dividend date, Aug. 9, 2012, he or she does not qualify for the dividend. Hence, they can also plan to take advantage of recently announced dividends as well as favorable stock price movements. However, the pay date can occur just a few days after the record date. That's why a stock's price may rise immediately after a dividend is announced. The procedures for stock dividends may be different from cash dividends. 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. June 23rd ex-dividend date --> Buy on this day and you won't receive the dividend. Microsoft to cut 11,000 jobs across several divisions. To collect a stocks dividend you must own the stock at least two days before the record date and hold the shares until the ex-date. How and When Are Stock Dividends Paid Out? The ex-dividend date is the date which is used to decide which shareholders will receive a dividend payment. A dividend is a distribution of earnings, often quarterly, by a company to its shareholders in the form of cash or stock reinvestment. The payable date can vary depending on the preferences of the company, but will always be the last of the four dates. An official website of the United States government. Cum Dividend is the status of a stock when the company is preparing to pay out dividend in the near future. 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. Stock traders often attempt to get in ahead of those who regularly engage in dividend-capture tactics by buying days or weeks ahead of the date that companies declare their regular dividends. A shareholder with 1000 ABC shares would receive $500. Accessed Aug. 8, 2020. 06/04/2023. Russell Gold considers himself as both a contrarian and dividend growth investor. Yet if a trader were to sell Apple shares on or before the ex-dividend date, Aug. 8, 2012, he or she does . Often, they are separated by just one working day to evaluate the qualifying shareholders.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[250,250],'cfajournal_org-banner-1','ezslot_3',146,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-banner-1-0'); It is the actual date of 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 . Selling Shares Before the Ex-Dividend Date. Other important dates include the record date, which is "T+1" of the ex-dividend date, the declaration date, and the . Accounting for Written Off Bad Debts: Definition, Example, and Journal Entries. Many investors want to buy their shares before the ex-dividend date to ensure that they are eligible to receive the upcoming dividend. Its calculated by subtracting any transaction costs and the tax (where dividends captured via this strategy are taxed at the higher ordinary dividends rate versus the lower qualified dividends rate) from the dividend the company pays. All stockholders before the ex-dividend date become entitled to dividends. Trading on ex-dividend dates can be confusing. ._1sDtEhccxFpHDn2RUhxmSq{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;display:-ms-flexbox;display:flex;-ms-flex-flow:row nowrap;flex-flow:row nowrap}._1d4NeAxWOiy0JPz7aXRI64{color:var(--newCommunityTheme-metaText)}.icon._3tMM22A0evCEmrIk-8z4zO{margin:-2px 8px 0 0} On or after that date, the dividend will go to the seller even though they no longer own the stock. To collect a dividend from a short-term stock investment, the shares must be held until the share price recovers to at least the value on the day before the ex-dividend date. If you purchase before the ex-dividend date, you get the dividend. The dividend having been accounted for, the stock and the company will move forward, for better or worse. Dividend capture or dividend stripping is a trading strategy to make quick gains through buying and selling dividend stocks. What Is a Scrip Dividend Alternative? On the morning of the ex date, the market makers will lower the price of the stock by the amount of the . All shareholders of the company before the ex-dividend date would be entitled to the dividend payment. . Hence, a dividend announcement will also affect your investment in ETF or mutual funds.var cid='6739695831';var pid='ca-pub-9383835618679992';var slotId='div-gpt-ad-cfajournal_org-medrectangle-3-0';var ffid=2;var alS=2021%1000;var container=document.getElementById(slotId);container.style.width='100%';var ins=document.createElement('ins');ins.id=slotId+'-asloaded';ins.className='adsbygoogle ezasloaded';ins.dataset.adClient=pid;ins.dataset.adChannel=cid;if(ffid==2){ins.dataset.fullWidthResponsive='true';} Therefore, if you absolutely must sell the stock on the ex-dividend date and recoup the cash, place a realistic order. 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. Thus, dividend announcements can have various effects on a companys share price. If the record date is Thursday, Aug. 8, the ex-dividend date would be Wednesday, Aug. 7, meaning anyone who bought the stock on Aug. 7th or later would not receive a dividend. Let us suppose a company ABCs current share price is $ 60. This is because share prices usually drop by the amount of the dividend on the ex-dividend date. 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