If that’s the case, it would be profitable to buy the stock right before the ex-dividend day and sell immediately after the record date, collecting the dividend payment on the payment date. Lots of other factors affect the share price every day: the overall stock market trend, macroeconomic news, and of course the demand and support for the stock.Īs a result, the share price might decline by a smaller amount than the dividend, not decline at all, or even rise. In practice, this often doesn’t always happen. The idea is simple: Buyers on that day won’t get the dividend payment so they’ll pay less for the stock than the people who bought the day before and will collect the dividend. In theory, on the ex-dividend date, the share price should fall by the amount of the dividend. On the record date, the company takes a snapshot of its shareholders and then sends them the money on the payment date. At any point before the ex-dividend date, investors can buy the stock and get the next dividend. So the order is as follows: The company announces the dividend on the declaration date. This is usually a couple of weeks after the record date. Payment date: This is the day when investors receive the dividend.If you buy on this day or later, you won’t get the dividend. Ex-dividend date: This date is set according to stock exchange rules and usually one business day before the record date.Record date: This is the day the company will check its list of shareholders to determine who gets the dividend.The announcement also includes the record date. Each company follows their own corporate calendar and usually announces dividends with quarterly or annual earnings reports or through a separate press release. Declaration date: That’s when the company’s board of directors announces a dividend.Dividend Terms Every Investor Should Knowīefore we go into the specifics of trading stocks to capture dividends, let’s make sure we’re on the same page about some important terms.įor each dividend, there are several key dates to know: In this post, we’ll explain how this trading strategy works, give a real-world example, and outline advantages and disadvantages as well as some alternatives. This is known as the dividend capture strategy. Unlike regular dividend investing, which is focused on long-term stocks, some traders try to profit from holding stocks for short periods, just enough to pocket the dividend. Wouldn’t it be nice to collect dividends every single day? That’s exactly what some traders aim to do.

Dividend capture strategy