Trading dividend price run ups

[WilkensOne]

Hey all,

I was reading today about buying shares or CFD's in companies weeks before their ex-dividend date and selling them after the price has risen in anticipation of the dividend payment. It seemed like quite a simple strategy that if money management was used could be profitable, am I missing a big factor or something, had anyone attempted this?

Wilkens

 

[Julia]

Wilkens, there are quite a few threads about this. Try doing a search for a member Rozella.
He did a lot of this. Remember that the SP will usually fall approx the amount of the dividend after the ex div date.

 

[FlyingFox]

I don't think this would be any different to holding the stock until dividend payout. The only difference being that the increase in price will be relative to what the market is expecting in terms of a dividend which maybe different from what is issued. You probably avoid some volatility this way though.

 

[WilkensOne]

Thanks for the replies, I didn't see any threads when I searched it but will have a look for the particular member.

 

[sydboy007]

I was reading that for some shares with fully franked dividends that have a large % of foreign owners, who can't take advantage of the franking credits, that generally the fall in the share price on the ex date is usually less than the value of the grossed up dividend.

Something like 40-45 days prior to the ex date seemed to offer a good chance of gaining the dividend and then being able to sell on the ex date and bank the extra received from the dividend.

Only issue I can see is 45 days is a long time to have money at risk