Dividend, Share Price: Is there a connection?

[rozella]

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

G'day TheAbyss,

CDX has sold its last remaining substantive asset. The directors are distributing the surplus cash to shareholders in the form of a dividend (118.0/share) & return of capital (107.96/share)

It seems to me that once exdiv & ex CR comes around, there won't be much left in the company as they have given it to the shareholders.

You should read CDX announcements & make up your own mind.....if you do not have a regular source, go to CDX announcements

 

[TheAbyss]

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

Thanks Rozella. Highly informative thread.

 

[rozella]

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

Bought WES on the open today @ 3900.0 with a margin of 75%
Investment 975.0/share
Dividend announcement expected 15th February.
Exdiv expected 20th February
Last years dividend was 65.0/share fully franked 27.86/share.

Bought another parcel of WES today @ 3889.0 with a margin of 75%
Investment 972.25/share
Dividend announcement expected 15th February.
Exdiv expected 20th February
Last years dividend was 65.0/share fully franked 27.86/share.

 

[j4mesa]

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

Hi Rozella,

I am newbie here.
Have done couple of div. trade.

I appreciate your posting here, though no much response from people.
Soon there will be a lot of comp goes ex div.......

I have a question here.
According to my history observation, for shares in bank such as CBA,SGB ,etc.......
If we are too late to get into long position (price is high already), I find out that if we short them using CFD ,it is benefecial as they have 100% franking........

so on ex div day...they will drop more than their div ?
based on ur exp, would you agree with that theory ?

Will keep an eye on this thread.........



Please do not take my post as financial advice,just a forum to exchange opinion.....

 

[rozella]

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

G'day j4mesa

I appreciate your posting here, though no much response from people.
Soon there will be a lot of comp goes ex div.......

I am guessing at not much response because trading for dividends to most probably seems a slow grind, but it is not like that at all & is as much as I wish to handle as a full time trader. I have never looked back since trading this way & for me it is quite profitable.

Yes, the reporting season will start next month & will be full-on then.

so on ex div day...they will drop more than their div ?
based on ur exp, would you agree with that theory ?

This will depend largly on market sentiment on the day they go exdiv....how other world markets show the lead etc.

With the large banks on a good market day for exdiv, they may almost recover in 1 or 2 days, but on a really down day they could drop the dividend + franking credit + some......I always allow for stocks to drop the div + fc because I must make allowances for the effect on margin loans, so some planning is involved as most of the time I take full advantage of available credit & am in the buffer zone more times than not.

According to my history observation, for shares in bank such as CBA,SGB ,etc.......
If we are too late to get into long position (price is high already), I find out that if we short them using CFD ,it is benefecial as they have 100% franking........

With shorting using CFDs, the provider will debit our account to the value of the dividend, so yes, if the stock drops more than the dividend, then we will win by that amount, however, this does not happen that often if your selections meet the required criteria unless this is your aim.

I also trade CFDs every day using only the top 20 stocks, however, I rarely find it necessary to short them.

 

[j4mesa]

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

Hi Rozella,

Thank you for your prompt reply.

 

[rozella]

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

Sold one of my oldest holdings today WBC @ 2490.0
Bought 10th May 2006 @ 2472.0 with a margin of 75%
Investment 618.0/share
Exdiv 1st June, dividend 56.0/share, fully franked 24.0/share.
Exdiv 16th November, dividend 60.0/share, fully franked 25.71/share.
Gross profit 183.71/share = 29.72% return on investment, incl fc. 258 days.
Interest eats up alot on these longer trades.....far better to keep them shorter periods & churn stocks.

 

[rozella]

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

Sold SGM today @ 2015.0
Bought 8th January @ 1955.0 with a margin of 70%
Investment 586.50/share
Dividend announcement expected around 2nd February
Exdiv expected around 27th March
Last years dividend was 45.0/share 47% franked 9.06/share
Gross profit 60.0/share = 10.23% return on investment. 16 days

 

[rozella]

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

Bought GUD on the close today @ 835.0 with a margin of 65%
Investment 292.25/share
Dividend announcement expected 30th January
Exdiv date expected 20th February
Last years dividend was 27.0/share fully franked 11.57/share

 

[j4mesa]

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

24 January 2007 :

CFD Trade - Dividend Trading :

Buy AWC @ $ 6.78 for 3000 units

Target : Sell @ ??? not calculated yet....

 

[rozella]

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

Bought TLSCA today @ 285.0 with a margin of 80%
Investment 57.0/share
Dividend announcement expected 15th February
Exdiv date expected 26th February
Last years dividend was 14.0/share fully franked 6.0/share

 

[rozella]

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

Sold CBA today @ 5049.0
Bought 4th January @ 4941.0 with a margin of 75%
Investment 1235.25/share
Dividend announcement expected 14th February
Exdiv expected 20th February
Last years dividend was 94.0/share fully franked.
Gross profit 108.0/share = 8.74% return on investment. 21 days

 

[rozella]

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

Sold WDC today @ 2205.0
Bought 16th January @ 2080.0 with a margin of 75%
Investment 520.0/unit
Distribution announcement expected 2nd February
Exdistribution date expected 7th February.
Last years distribution was 55.5/unit, 2.73% franking 1.75/unit
Gross profit 125.0/unit = 24.04% return on investment. 9 days

 

[rozella]

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

Re-entered CBA today @ 4991.0 with a margin of 75%
Investment 1247.75/share
Dividend announcement expected 14th February
Exdiv expected 20th February
Last years dividend was 94.0/share fully franked.

 

[rozella]

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

Sold 3 parcels of SGB today @ 3350.0......first two were sold together.

Sold SGB today @ 3350.0
Bought 9th November @ 3325.0 with a margin of 75%
Investment 831.25/share
Exdiv 29th November, dividend 77.0/share fully franked 33.0/share
Gross profit 135.0/share = 16.24% return on investment, incl fc. 82 days

Sold SGB today @ 3350.0
Bought 23rd November @ 3362.0 with a margin of 75%
Investment 840.5/share
Exdiv 29th November, dividend 77.0/share fully franked 33.0/share
Gross profit 98.0/share = 11.66% return on investment. incl fc. 68 days

Sold SGB today @ 3350.0
Bought 9th November @ 3325.0 with a margin of 75%
Investment 831.25/share
Exdiv 29th November, dividend 77.0/share fully franked 33.0/share
Gross profit 135.0/share = 16.24% return on investment, incl fc. 82 days

 

[rozella]

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

Bought SGM today @ 2140.0 with a margin of 70%
Investment 642.0/share
Dividend announcement expected possibly tomorrow
Last years dividend was 45.0/share 47% franked 9.06/share

Bought WDC today @ 2228.0 with a margin of 75%
Investment 557.0/share
Distribution announcement expected possibly tomorrow
Exdistribution date expected 7th February.
Last years distribution was 55.5/unit, 2.73% franking 1.75/unit

Bought WDC today @ 2226.0 with a margin of 75%
Investment 556.5/share
Distribution announcement expected possibly tomorrow
Exdistribution date expected 7th February.
Last years distribution was 55.5/unit, 2.73% franking 1.75/unit

 

[rozella]

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

Bought another parcel of SGM today @ 2185.0 with a margin of 70%
Investment 655.5/share
Dividend announcement expected possibly 5th February
Exdiv expected about 27th March
Last years dividend was 45.0/share 47% franked 9.06/share

 

[j4mesa]

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

Hi Rozella,

when you do dividend trading, do you actually find out a prospective company (ie company that is doing well on their current quarter ?)

or

do you just hunting on the company as long as they are giving out dividends ?

Thank you........
I am aware that you make living from div. trading, was that enough to make you have a luxurius live ?

 

[annalivia]

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

Q: What relevance does the dividend yield have in deciding what stocks to buy?

A: None. The best companies to invest in are those that have the ability to retain all of their profits to reinvest in the business at a high rate of return (ROE). Given the option of receiving a dividend or leaving it in the business to compound at say 20% per annum, the choice should be quite clear, unless of course you have the ability to do better; in which event, retaining the stock wouldn't make any sense. Conversely, you don't want a business to retain your profit share to reinvest at a lower rate of return than you could achieve elsewhere. In such event, not only are you better off by the company disbursing all profits as dividends, but you want out-period.

One measure of the economic viability of a business is the percentage of profits distributed as dividends. If the nature of the business means it has little opportunity to expand and grow, it has no use for retained profits and will, or should, pay out nearly all of its profits as dividends. A growing business is one that has the ability to expand by virtue of demand for its goods or services. Providing a high ROE is maintained, the lower the dividend the better the investment return.

al

 

[rozella]

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

G'day j4mesa & annalivia,

We all have our own niche in the sharemarket & mine is to profit from cum-dividend stocks, it does not mean that my method is better than anyone elses, as we do best what we know best & as we specialise, we become better at our job.

My aim is to profit the dividend amount on every trade whether it is a trading profit or the dividend itself. Sometimes this can be achieved a multiple of times prior to the exdiv date.

As of yesterday for this FY, my realised return on capital invested is 44.4% in 217 days after interest & brokerage. Average holdings are 23.86 days but some trades do go over the 45 days. Longer trades do not achieve the profit for me as interest eats into profit & wastes capital that could be working faster. My working capital has been turned over 18.32 times this FY sofar.

I am not interested very much about the history of a stock & do not read any analyst or broker reports. I only read applicable company reports. The basis of my strategy is The lure of the dividend gives a stock a reason to rise

Q: What relevance does the dividend yield have in deciding what stocks to buy?

First of all the stock must have good liquidity, then if with marginlending the dividend & franking credit shows a yield of 10% or greater for the coming payment, then it is a prospect.

Then after dividend announcement the report shows increased profit, increased dividend & a good outlook for the future, then the probability of a stock rise is above average.

I am aware that you make living from div. trading, was that enough to make you have a luxurius live ?

It is my prime source of income & it is about planning the dividends, when & how much, to be able to draw a reasonable salary each month, then the rest does not matter whether it is trading profits or more dividends.

Dividend trading is not everyones "cup of tea" but has served me well over the last 8/9 years with very good returns.

Cheers,