Living off dividends

[armani]

Hi,

I am a new member of this forum and just a had a quick questions in regards to making money off Dividend stocks:

Can we buy a stock just before dividend's record date, hold it a few days after record date and then sell it. By doing this, you will not be locking up your capital and instead you will make money be receiving dividends. Do people already do this? or this is illegal?

Thanks in advance

Keener

[DCA]

The price of a dividend stock will usually drop by roughly the dividend amount as the record date passes and can be expected to rise by the dividend amount in the period to the next dividend date.

D

[Jordo]

A much better strategy would be to buy about a month before the dividend, or after the last dividend is payed out and the resulting price crash, and sell it 3-5 days before the next dividend is payed out, many times a 2-3% dividend will run the share price up 10-15% before the payout, and then drop just as much, or more a day before the payout.

[bryanmcn]

Armani
I would be carefull about trying to "optimize within the noise". Many of these hi Divi stocks and income funds move in one day, what they pay out in a month.
Bryan

[aaron28]

The strategy is not a secret, and it is not illegal. There are books about this particular question. I think it can be done as long as you are also earning money on the trade, not losing, while the stocks record dates occur. I think maybe a good way to trade is to invest and hold several positions with different record dates. That way you are also getting the same thing with out paying the sales commissions.

[toprngr]

I believe that this is one of the most risky moves comparing to the traditional trading which is buy and sell. In fact, I believe that some companies have annual dividends, which means you only get paid once a year. And there are a lot of companies that have such rules nowadays in order to prevent such cases from happening. In order to have your dividend, you have to be invested on the company for a time limit of 1 year minimum and from that year onwards only you get your dividend.