Dividend Ex-Date Price Drop

Discussion in 'Learn how to trade or invest by asking questions' started by Yang Xiong, Nov 14, 2016.

  1. Yang Xiong

    Yang Xiong New Member

    Why does Dividend Stock Price drop by their Dividend Pay amount? Does it really drop or is it just an expression? I looked at some dividend stock and on the date of the ex-date, some stock drop some didn't and some even rose, what's best way to combat that buying prior to the ex-date?
     
  2. rynev33

    rynev33 Member weekly contest winner

    They're priced in many times. Buying a stock just in time to get the dividend rarely works
     
  3. Yang Xiong

    Yang Xiong New Member

    Whats the best way to capitalized on Dividend stocks? Should you buy after the price drop or before the price drop.
    For example: OAKS had a special divided payout at 1.33, and I purchase the stock at 6.10, the following day the price drop to 4.86 because the market corrected itself to adjust for the dividend price. I am expected to received 665 in dividend payment but I do not plan to hold onto the stock for a long time. I plan on selling the stock after the recorded date. I do understand that I will be selling it for a lost, so plan on selling it when the stock price jump up at least 25%, which will put the stock at 5.10. If I sold it at that price, I will end up with 2,550 and the purchase price was at 3,3065 a difference of 515. The dividend payment of 665 - 515 = 150 a dividend profit of 150. Would that be a ethical or good way of capitalizing dividend stocks.

    Or should I had waited until the dividend price drop from 6.10 t0 4.86 and buy in on the ex-date with a .35 increase that the stock price rose back up to 5.21 and sell at 5.21 or better. 4.86 / 3,000 = 617 shares. 5.21 X 617 = 3,215 therefore I would have made a profit of 215 vs the 150 from the buy in before the ex-date.

    Can you guys help me clarified the best strategy or way to capitalized on dividend stocks.
     
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