Zecco logo
|  
  
Content Name: AdCommunityTopBanner
Revision #: 1
Edit Content

Dividends: How long do I have to hold the stock?

 

8
Sep, 2011
Original Post
Thumbs Up Thumbs Down +1
I recently learned the benefits of earning dividends. I am often in and out of stocks, and don't usually HOLD. Will I ever see any dividends? How long do I need to HOLD a stock to see a dividend?
1 vote(s)

6 Replies

  • Sep 08, 2011 at 10:08PM
    Thumbs Up Thumbs Down +1

    Member log  WJCIV Member participation ranking in the ZeccoShare community sMember is sharing their portfolio

    Overnight if you time it correctly.

    When a dividend is announced, there is an ex-div date and a record date announced along with the payment date. Essentially, if you hold the stock at closing the day before ex-div, you are eligible for the divy. That is confirmed a few days later on the date of record, which is when the broker has to notify the company who owned the shares before the ex-div.

    You should also realize that in general, stocks open lower the morning of the ex-div by roughly the price of the divy. Usually nothing really changes overnight except that you are no longer eligible for the divy - so why would you pay the same price? So you can't get magical extra gains from the dividend over trading, because there is a bit of an offset.
    3 vote(s)
  • Sep 08, 2011 at 10:11PM
    Thumbs Up Thumbs Down +1

    Member log  Uncle Billy Member participation ranking in the ZeccoShare community

    To receive the dividend you must hold the stock at the close of business on the day before the ex dividend date.This will cause you to be a "shareholder of record" on the shareholder of record date which is the determinant of the right to receive the dividend.
    1 vote(s)
  • Sep 09, 2011 at 8:52AM
    Thumbs Up Thumbs Down 0

    Member log  surfbanker1978 Member participation ranking in the ZeccoShare community sMember is sharing their portfolio

    Thanks for the feedback..
  • Sep 09, 2011 at 12:22PM
    Thumbs Up Thumbs Down 0

    Member log  SlownSteady Member participation ranking in the ZeccoShare community

    WJCIV,

    Actually, the price is changed before the market opens: certain open orders, for example limit orders, have the price reduced by the amount of the dividend unless a "do not reduce" instruction has been issued by the client. This reduction is one of the factors that impact the price of a given security as buys and sells are rebalanced to give an equilibrium trading price for the market/exchange opening. Since most dividend yields are small, this change is often not observable. There are exceptions: if you check out Merck on Tuesday next week (dividend yield in excess of 4%), you'll likely see an impact on the opening price, but maybe not quite 1%. For many other companies with low yields, the impact of a reduction in price on the ex-dividend date is usually lost in the noise.
  • Sep 09, 2011 at 2:33PM
    Thumbs Up Thumbs Down 0

    Member log  d.b.a. Member participation ranking in the ZeccoShare community

    The best way to do a dividend play is to buy the day before the x-date when the market is down, and sell the next day when the market is up. The broader market can offset and even oppose the usual loss in share price on the x-date.

    Another good strategy is to buy a stock in the morning of the day before the x-date, and sell in the afternoon the same day. The price will often trend up intraday as people buy to capture the dividend. You won't get the dividend, but as long as your profit exceeds what the dividend would have been, you did good.
  • Sep 13, 2011 at 5:58AM
    Thumbs Up Thumbs Down +1

    Member log  BigPhoenix Member participation ranking in the ZeccoShare community

    With a significant dividend, the price of a stock may move up by the dollar amount of the dividend as the ex-dividend date approaches and then fall by that amount after the ex-dividend date...
    1 vote(s)

Content Name: AdCommunityBottomBanner
Revision #: 1
Edit Content