A list of the major disadvantages includes: Limitations of the Dividend Capture StrategyĪlthough capturing dividends can be an easy way to make quick income, it comes with several drawbacks. See our complete Ex-Dividend Calendar here. A subscription to a detailed dividend calendar that provides a comprehensive list of all of the companies that will declare and pay upcoming dividends is perhaps the only research tool that is really necessary for success. This strategy also does not require much in the way of fundamental or technical analysis. Obviously, this could lead to big profits if the dividend payouts are reasonably high. By buying stocks the day before the ex-date each day, theoretically he could capture a dividend every trading day of the year in this manner. But an experienced capture strategist can find a stock with an ex-dividend date for every day of the month. Probably the greatest benefit of using this strategy to capture dividends is that there are thousands of dividend-paying stocks to choose from, and some pay higher dividends than others, albeit with greater risk and volatility. The high turnover generated by this strategy makes it popular with day traders and active money managers.Īdvantages of the Dividend Capture Strategy Because the investor owned the stock on the ex-date, the dividend will automatically be paid regardless of whether the investor still owns the stock by the time it is constructively received. The investor merely purchases the stock prior to the ex-dividend date and then sells it either on the ex-dividend date or at some point afterward. Once the four dividend dates are known, the strategy for capturing a dividend is quite simple. Pay Date - The day the dividend is actually paid to the shareholders.Date of Record - The day a company looks at its records to determine shareholder eligibility.Investors must buy a stock before the ex-date to receive the dividend. Ex-Dividend Date - The day the stock price is accordingly reduced by the amount of the dividend.
The declaration will specify the amount of the dividend as well. Declaration Date - This is the date upon which the board of directors of the issuing corporation declares that a dividend will be paid.There are four key dates that occur in the dividend payment process: In order to capture a dividend effectively, it is necessary to understand the general schedule under which all stock dividends are paid.
0 kommentar(er)
