Dividend yield play

[indeck]

Hi, first post!

I am curious if there is anyone out there who is chasing yield from dividends and selling shortly there after. I don't have a great deal in the market however would like to get involved in trading more actively. I have found that generally this practice is fairly comon during a bull market so perhaps now isnt the best time for it although there is always a buck to be made somewhere.

Cheers
C.

 

[pixel]

Hi, first post!

I am curious if there is anyone out there who is chasing yield from dividends and selling shortly there after. I don't have a great deal in the market however would like to get involved in trading more actively. I have found that generally this practice is fairly comon during a bull market so perhaps now isnt the best time for it although there is always a buck to be made somewhere.

Cheers
C.

G'Day C.
and welcome to our community

Dividend stripping isn't all the uncommon. It can be done in two distinctly different ways - best to look back through the chart's history and see how the sp has reacted around ex-div dates.
1. Buy a few weeks before ex-div and watch the price rise. Qualify for the dividend, and then hold on to the share as it - hopefully - regains the dividend drop after a short time.
2. Buy a few weeks before ex-div and watch the price rise. Sell a day or two before ex-div, raking in the profit, rather than the dividend that's lost immediately once the share trades ex.



The most recent TLS dividend offered both options:
I bought on August 12 and 13, average price a tick under $2.90. Sold early on the 30th for a 10c profit, which would have been eroded had I waited for the 14c dividend that was more than lost in the gap-down on ex-div 23/08.
Alternatively, I could have held out for the dividend, or bought back low ex-div and ridden part of the gap back up, when the share recoverd to $2.90 on 08/09.

Meanwhile, the dividend is history and TLS proves yet again that it's a dog.

 

[So_Cynical]

I don't divi strip but have noticed that with many stocks it seems to be doable again...just with my portfolio stocks ive noticed it was possible to get a good return by entering a week or 4 or so before ex-date, holding for the divi and then selling 1 to 6 weeks later for very close to entry price or above it!

Just a matter of timing the entry and exit and having a bit of flexibility, have a look at the 3 > 6 month charts for HHL, PTM and CTN (last divi) and MRE (return of capital) and you'll see what i mean....i even posted about it in the MRE thread, commenting that it was like a free money give-away.

 

[Julia]

From the link to "Members List", find "Rozella".
He doesn't seem to be around these days, but he posted a great deal of useful info on this.

 

[So_Cynical]

From the link to "Members List", find "Rozella".
He doesn't seem to be around these days, but he posted a great deal of useful info on this.

Yep and he stopped posting about the same time the market started tanking.

 

[skc]

This ex dividend season happened to be one of the strongest month for the overall market (up 7% in Sept), and dividend stripping was easy as free money (in hindsight).

You can in fact buy 1 day before ex-div and sell first thing next morning. Collect the dividend, franking credits (depending on your tax situation) and suffer little downside from the div drop off.

I've traded this strategy for the first time this month with a fair bit of success. But I short another correlated share or the index to hedge my exposure.

 

[malachii]

You can in fact buy 1 day before ex-div and sell first thing next morning. Collect the dividend, franking credits (depending on your tax situation) and suffer little downside from the div drop off.

Just be careful doing this as you lose the imputation credit once you reach $5000 unless you hold the share for 45 days.

malachii

 

[skc]

Just be careful doing this as you lose the imputation credit once you reach $5000 unless you hold the share for 45 days.

malachii

Yes I forgot to mention the 45day rule. That's why I've stopped doing so for franked dividends (as I've hit my limit). However the profitability is not nearly as good for unfranked dividends for obvious reasons.

 

[roland]

Another option is to buy on the ex dividend dip, often it dips further than the yield, or you could do both, grab the dividend and buy more on the dip. Not very technical but works with the right type of stocks.

 

[indeck]

I picked up a small amount of map today as a trial. Thanks for the advise guys.

 

[awg]

From the link to "Members List", find "Rozella".
He doesn't seem to be around these days, but he posted a great deal of useful info on this.

Yep and he stopped posting about the same time the market started tanking.

It is my understanding he stopped posting because his posts were deemed to breach the ASIC rules on unlicenced advice.

Obviously though, this strategy is doomed in a negative market.

He had a webpage that gave a good outline of his methods, dont know whether it is still alive.

On a related note, targetting Shares or Preference Shares with Imputation Credits and high % of foreign holders on the register can be fruitful for local holders, as Franking Credits are of no use to the OS holders, and a study has found that this factor does affect price fluctuation.

Sorta like a free lunch

 

[gpappy56]

Something else that has not been mentioned is signing up for the DRP.
I have just completed a divvy play on AMP. It has just recovered to the ex dividend price in the past few days so I am now out, but up until the record date I have the option of signing up for the DRP. Announcement out yesterday has the shares being issued at $5.01 with the current price being $5.23. A nice little bonus if you don't need the cash. Of course there is no guarantee that the price won't have dropped by the time the shares are issued.

 

[indeck]

Seems Rozella is mia from what I can see along with his web site. I am in the process of trawling through his old thread for research. One thing I am struggling with is finding upcomming dividend lists. There are plenty around however they only seem to list announced dividends rather than a forward schedule (my post count is too low to post links). Is anyone aware of such a site that would help me out?

*ed* I guess the issue is listing expected ex dates on past history will not always be accurate. I don't need them to be absolutely correct just indicative for future purchases for div stripping.