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Stock dividends and X dates
Posted on 5/31/17 at 9:13 pm
Posted on 5/31/17 at 9:13 pm
Ok so I have a question. Now first off I am very new to stock trading so this is probably a stupid question but here goes.
If say I have $20,000 to play with. Why wouldn't I basically look up stock dividend x dates and basically just move my money for a day. Collect the dividend and then the next day continue and so on and so forth. From what I have read, all I need to do is hold the stock on the X date and then it would pay out on the pay date regardless if I sold the stock? I realize if there was some strategy to this that someone else would have been doing this but what am I missing?
Thank you
If say I have $20,000 to play with. Why wouldn't I basically look up stock dividend x dates and basically just move my money for a day. Collect the dividend and then the next day continue and so on and so forth. From what I have read, all I need to do is hold the stock on the X date and then it would pay out on the pay date regardless if I sold the stock? I realize if there was some strategy to this that someone else would have been doing this but what am I missing?
Thank you
4
Posted on 5/31/17 at 9:15 pm to SaintNation
you mean DIVIDEND STRIPPING??
Posted on 5/31/17 at 9:17 pm to Fat Bastard
Is that illegal or something?
Posted on 5/31/17 at 9:42 pm to SaintNation
Also very new to stocks. I thought you had to hold the stocks through the pay date.
Posted on 5/31/17 at 9:43 pm to KamaCausey_LSU
(no message)
This post was edited on 5/31/17 at 9:44 pm
Posted on 5/31/17 at 10:50 pm to SaintNation
Posted on 6/1/17 at 12:01 am to Fat Bastard
Usually have to hold the stock 2 business days before the ex date to allow for the transaction to settle.
Posted on 6/1/17 at 8:28 am to SaintNation
quote:You'd be one day too late. The "ex-date" means it is the first day after being eligible to receive the declared dividend.
all I need to do is hold the stock on the X date
Remember it this way: The ex-date means the owner of a stock is excluded from receiving the dividend.
Plus, it appears you don't know the price of a stock is adjusted down by the dividend amount on the ex-date.
For example, if JPM declares a $.50/share dividend with an ex-date of June 1 and it has a closing price of $80.00 on May 31, before the trading day starts on June 1 its adjusted beginning-of-the-day market price will be shown as $79.50.
Posted on 6/1/17 at 5:53 pm to LSURussian
quote:
For example, if JPM declares a $.50/share dividend with an ex-date of June 1 and it has a closing price of $80.00 on May 31, before the trading day starts on June 1 its adjusted beginning-of-the-day market price will be shown as $79.50.
Right but once trading kicks off those stocks sometimes move up. It's not quite the arbitrage opportunity some want it to be but there is some money to be made if you know the trades and are smart about it.
I don't know the trades and have been trying to figure out how to make money off this type of trade for a while now.
Posted on 6/1/17 at 7:05 pm to SaintNation
Dividends for buying, not selling :
Normal settlement: Trade date + 3 business day, so 1 day before the ex-date. Ex date for basically most stocks is 2 days before the record date.
Cash settlement: on record day (you probably don't really need to know this)
When a stock pays a dividend, the price drops by the amount of the dividend given out. So for this strategy to be worthwhile, you would need to hold the stock until you make enough of a gain (after div price drop) to feel comfortable selling your position.
Normal settlement: Trade date + 3 business day, so 1 day before the ex-date. Ex date for basically most stocks is 2 days before the record date.
Cash settlement: on record day (you probably don't really need to know this)
When a stock pays a dividend, the price drops by the amount of the dividend given out. So for this strategy to be worthwhile, you would need to hold the stock until you make enough of a gain (after div price drop) to feel comfortable selling your position.
This post was edited on 6/1/17 at 7:10 pm
Posted on 6/2/17 at 10:55 am to oklahogjr
quote:And sometimes they move down, just like all other stocks every day.
Right but once trading kicks off those stocks sometimes move up.
quote:
I don't know the trades and have been trying to figure out how to make money off this type of trade for a while now.
If there was a guaranteed way to make money off of dividend trading, someone would have already figured it out and would have written a book about it.
Posted on 6/2/17 at 11:05 pm to LSURussian
I was lucky enough to get in on the FBRC special dividend of $7.61/share on the last day. Making money on dividends is possible, just not as easy as it seems. I still have to sell my shares of the new company once they are converted to Riley Financial.
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