Dividend, Share Price: Is there a connection?

[rozella]

Re: Dividend, Share Price. Is there a connection?

Been out of action most of the day, a huge spotted gum fell onto the power lines at 2.30am & upset 3 substations, so no electricity, & started work at 2.00pm

Extended closing matchout today was savage, but managed to dip a toe into the banks.

Bought ANZ on the close @ 2400.0 with a margin of 75%
Investment 600.0/share
Profit announcement expected around 25th October, exdiv expected around 8th November, last years dividend was 54.0/share fully franked 23.14/share.

Bought WBC on the close @ 2110.0 with a margin of 75%
Investment 527.50/share
Profit announcement expected around 3rd November, exdiv expected around 17th November, last years dividend was 44.0/share fully franked 18.86/share.

Sold PMN today @ 503.0
Bought 14th September @ 488.0 with a margin of 70%
Investment 146.40/share
Exdiv date 10th October, dividend 10.5/share fully franked 4.50/share
Gross profit 15.0/share = 10.25% return on investment.

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

Bought another parcel of ANZ today @ 2382.0 with a margin of 75%
Investment 595.50/share
Profit announcement expected around 25th October, exdiv expected around 8th November, last years dividend was 54.0/share fully franked 23.14/share.

Bought another parcel of DJS today @ 234.0 with a margin of 65%
Investment 81.90/share
exdiv 11th October, dividend 7.0/share fully franked.

 

[Kauri]

Re: Dividend, Share Price. Is there a connection?

Bought SGB today @ 2780.0 with a margin of 75% Investment 695.0/share.
Expected profit report 30th September.
Last years dividend was 62.0/share fully franked 26.587/share

rozella

Just joined you in SGB..@2765... isn't the profit report due end of this month??

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

Yes Kauri, I don't know why I said the profit announcement was 30th Sept, maybe confused it with their financial year end. Last year they reported profits 1st November.

SGB Down 40.0 atm to 2753.0 XAO down 79.1 points I was a bit too quick to buy ANZ this morning, down another 20.0 atm to 2362.0

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

Re-entered PMN today where I sold at previously @ 503.0 with a margin of 70%
Investment 150.90/share
Exdiv date 10th October, dividend 10.5/share fully franked 4.50/share

 

[It's Snake Pliskin]

Re: Dividend, Share Price. Is there a connection?

Hi Rozella,

You have probably discussed this before on the forum, but what indicators do you use for your strategy? How does a week like last week affect your strategy? How do you approach the rest of the month using your strategy?

Thanks in advance

Snake Pliskin

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

I have not posted any trades for a while, not that there was many, so this is a catchup.

Sold TEN 10th October @ 358.0
Bought 22nd June @ 400.0 with a margin of 70%
Investment 120.0/share
Exdiv 27th June, dividend 9.0/share, fully franked.
Gross loss 29.14/share = 24.28% loss on investment. 110 days

Sold WDC 12th October @ 1654.0
Bought 8th August @ 1790.0 with a margin of 75%
Investment 1147.5/share
Exdist 9th August, distribution 51.0/share, franking 12.57% 2.75/share
Gross loss 82.25/share = 7.17% loss on investment. 65 days

Sold WES 10th October @ 3897.0
Bought 12th August @ 4150.0 with a margin of 70%
Investment 1245.0/share
Exdiv date 15th August, dividend 127.0/share fully franked 54.43/share
Gross loss 71.57/share = 5.75% loss on investment. 59 days

Sold CBA 12th October @ 3758.0
Bought 1st August @ 3906.0 with a margin of 75%
Investment 976.5/share
Exdiv date 15th August, dividend 112.0/share fully franked 48.0/share
Gross profit 12.0/share = 1.23% return on investment. 72 days

No buys, have just been sitting on the fence. No money above.....but needed to be done.

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

Hi Rozella,

You have probably discussed this before on the forum, but what indicators do you use for your strategy? How does a week like last week affect your strategy? How do you approach the rest of the month using your strategy?

Thanks in advance

Snake Pliskin

G'day Snake Pliskin,

I only eyeball charts now, just to see the overall picture, & rely on " The lure of the dividend, giving a stock a reason to rise " plus other criteria, then use stoplosses & position sizes to limit risk......although I did let the above sells go too far.....it rarely pays. This last week was a loss, but when I re-enter with other stocks they will be at lower prices & the strategy will be on track again. I am reasonably cashed up now to take advantage of lower prices if I think the timing suits.

 

[It's Snake Pliskin]

Re: Dividend, Share Price. Is there a connection?

Rozella,

Thanks.
Snake

 

[It's Snake Pliskin]

Re: Dividend, Share Price. Is there a connection?

Hi Rozella,

I have another question regarding your dividend trading strategy.

How does it perform in a bear market or sideways market? Is it only a strategy that works in a bull market?

Thanks in advance.

Snake

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

G'day Snake Pliskin,

The most difficult period is like now, when we have had a sharp drop, so to be disciplined with stops is very important. Then all new purchases are starting on a lower rung of the ladder.

e.g. The trading on my website using eod data, selling only when the stops are hit, & allowing profits to run, leaves us with only one stock atm PMN, but we are cashed up sitting on the fence to see where the market is going. Entries into the banks will start soon, hopefully this week.
Margin Trading 2

Trading Diary 2

In a bear market I have found I can still make a living from the strategy, but you must be prepared to accept smaller trading profits & sometimes less than the dividend amount. i.e. Buy XXX @ 1000.0, dividend 30.0, sell after exdiv @ 995.0......gross profit 25.0 Whereas for best part of the last two years we possibly would have a gross profit of 40.0 or 50.0 But yes, you can still do okay in a bear market, but it is up to the individual trader to be focused...yields are higher as well. The volume of trades increases too.

 

[It's Snake Pliskin]

Re: Dividend, Share Price. Is there a connection?

Rozella,

Thanks
Snake

 

[RichKid]

Re: Dividend, Share Price. Is there a connection?

Some thoughts from Marcus Padley (a well known broker) on dividend stripping, thought it would be relevant to this thread: http://www.marcustoday.com.au/pdf/Dividendstripping.pdf

 

[wayneL]

Re: Dividend, Share Price. Is there a connection?

Some thoughts from Marcus Padley (a well known broker) on dividend stripping, thought it would be relevant to this thread: http://www.marcustoday.com.au/pdf/Dividendstripping.pdf

Interesting RK.

This caught my eye though:

to qualify for the franking credit and you must have the risk on the stock for the entire
period[b[ (can’t hedge)[/b].

Does this mean you can't buy a put on the stock?

This seems a tad mean spirited of the ATO.

Cheers

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

Holding period rule from the ATO site
The holding period rule requires you to hold shares ‘at risk’ for at least 45 days (90 days for preference shares) to be eligible for the franking tax offset. This rule, however, does not apply if your total franking credit entitlement is below $5,000. This is roughly equivalent to receiving a fully franked dividend of $11,666, based on the current tax rate of 30% for companies.

All this means is that you must own shares for at least 45 days, or 90 days for preference shares (not counting the day of acquisition or disposal), before being entitled to any franking tax offset.

Days on which you have 30% or less of the ordinary financial risks of loss and opportunities for gain from owning the shares cannot be counted in determining whether you hold the shares for the required period.

Financial risk of owning shares may be reduced through arrangements such as hedges, options and futures.

You have to satisfy the holding period rule once only for each purchase of shares. You are then entitled to the franking credits attached to those shares, unless the Related payments rule applies.

rozella

 

[wayneL]

Re: Dividend, Share Price. Is there a connection?

Holding period rule from the ATO site
The holding period rule requires you to hold shares ‘at risk’ for at least 45 days (90 days for preference shares) to be eligible for the franking tax offset. This rule, however, does not apply if your total franking credit entitlement is below $5,000. This is roughly equivalent to receiving a fully franked dividend of $11,666, based on the current tax rate of 30% for companies.

All this means is that you must own shares for at least 45 days, or 90 days for preference shares (not counting the day of acquisition or disposal), before being entitled to any franking tax offset.

Days on which you have 30% or less of the ordinary financial risks of loss and opportunities for gain from owning the shares cannot be counted in determining whether you hold the shares for the required period.

Financial risk of owning shares may be reduced through arrangements such as hedges, options and futures.

You have to satisfy the holding period rule once only for each purchase of shares. You are then entitled to the franking credits attached to those shares, unless the Related payments rule applies.

rozella

So you CAN hedge with options etc?

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

G'day wayneL,

This is the link holding period rule

 

[mit]

Re: Dividend, Share Price. Is there a connection?

Entries into the banks will start soon, hopefully this week.

Rozella,

What are you looking for before you'll enter again? My mechanical dividend system has me out of most stocks at the moment as well and I have to struggle against trying to bottom pick the market.

MIT

 

[rozella]

Re: Dividend, Share Price. Is there a connection?

G'day mit,

Nothing more than the ANZ is expected to report on 25th October, followed by WBC on 3rd November, & so on, so one would expect the bank prices to gain a bit of momentum shortly.

If it was not for the lure of the dividend to drive up prices, & that alone, I would not have any interest in banks atm

 

[finnsk]

Re: Dividend, Share Price. Is there a connection?

I have been looking at NHC my main and only reason for that is dividend they are paying 3 cents and a special of 13 cents and 10 cents capital return if approved by shareholders
It sounds like a very good short term investment providing share price stays where it is currently at $1.65.
Any comments appriciated.