Dividends

Why would you start a general thread for something that you don't even understand on the most basic level?

the price of a dividend is priced into the stock price.

look at stock charts. After the dividend is declared, the stock will fall (independent of the market volatility) by an equal price.

There is a lot more variables that go into why your example is retarded, but this is the basic answer

>>927037
different anon bumping for interest.

Why will the stock fall? Wouldn't it become more attractive, since buyers now know it will pay a dividend?

>>927097
The dividend is paid directly out of the company's cash, making the company less valuable by that amount after paying a dividend. This is automatically accounted for in the stock price by the exchange.

>>927104
So why do stocks often drop when they announce they are cutting the dividend?

>>927036
Then fucking explain it. I dont think this was a stupid question. It may even be a legitimaye strategy.

>>927029
You're only the 178th person since the creation of /biz/ to ask this stupid question. If only there was a internet search engine that let you type in questions and get back relevant web pages....

>>927190
I have been here for 6 months and never seen it asked. You dont have to try to impress ppl on the internet, anon. Stick around and maybe someone will answer it for us

>>927176
Because fundamentally the share price is a function of the value of future dividends. If you cut dividends, then share price will fall as people sell out of the stock because not offering them good enough dividend yield anymore

Also if a company needs to cut dividends it generally means its facing financial difficulty and future performance may suffer, so you sell out of your shares to realise value before you incur losses

>>927215
If what you say is correct and share price is a function of future dividends, then what the other anon said is wrong as all future dividends would be accounted for in the stock price.

E.g. if a companies has paid a dividend every quarter for 20 years, there is no reason to think it will not in the future, and that lost cash flow from a number of future dividends would be accounted for in the price. Which means the stock shouldnt drop at all when they announce the 81st dividend in a row. Why then would someone not buy one million shares, collect the dividend, and sell the next day?

>>927195
Bump

>>927029
Why would someone sell just before they get the dividend payout?

>>927218
As another poster said, when a company pays a dividend that dividend comes out of the company's own cash. Thus after the dividend is paid the company is now less valuable by the amount of the dividend; this explains why the stock price drops on the ex-dividend date.

If a company cuts its dividend, then that lowers analyst forecasts of future dividends. A simple model for determining the intrinsic value of a stock is
Value = (Yearly Dividend)*(1 + growth rate) / (Discount rate - growth rate)

So if the dividend is cut, the value of the stock will go down because the numerator has decreased.

>>927218
This question has already been answered in this thread. Because the amount of cash a company has is reflected in the stock price. It seens you cant understand that multiple factors influence stock price.

>>927224
why wouldn't they... sell before the dividend for a higher price or sell after dividend for a lower price..

(slightly more complex as you've got an ex dividend date etc..) but bottom line is it makes little difference - as if there would be an inefficiency so obvious as 'omg why not wait till the dividend is paid then sell'

>>927227
>>927226
I just checked all my dividend stock's dates against their charts. There is absolutely no correlation to price at all. What you are saying might work in theory, but it isnt reflected in reality.

>>927233
>retard doesn't even know about ex-dividend dates
/biz/ never fails to disappoint

>>927233
are you looking at the ex dividend date or the date the dividend gets paid?

>>927233
A stock will fall by about its dividend on its ex-dividend date ceteris paribus. Ceteris paribus is key. The fall may be more or less than the dividend depending on the marginal tax rates of shareholders. Note there is a difference between the ex-dividend date and payment date.

If the stock doesn't fall on the ex-dividend date, then there are other factors at play. Perhaps the broad stock market is up, there was an analyst upgrade, or an increased earnings range.

>What you are saying might work in theory, but it isnt reflected in reality.

For someone who seems to have little grasp of dividend theory, you sure sound pretty cocky and confident. Many people in this thread have provided reasonable answers to your questions: maybe you should try listening to them.

>>927233
Take this stock (Swiss Re) who's got a huge dividend:

http://www.google.com/finance?q=VTX%3ASREN

>22 april 2015
>stock is closing at CHF 95.55

>23 april 2015
>pays out a massive dividend of CHF 11.5
>stock is closing at CHF 86.40

>>927238
>>927239
>>927244
Yes, I checked the ex-dates. No, the price of the stocks did not drop. It did in one case and popped right back up 2 days later. I'll go get some individual cases and be back

>>927244
Im not trying to come off cocky and Im not confident in any of this, which is why I asked. What I am confident in is every dividend stock Ive looked at shows little to no corelation between the exdate and the stock price. Just go look for yourself. If it does drop on that day, it pops right back up or moves whichever direction it was.

I suppose the answer to my OP was there is nothing stopping anyone from doing this strategy.

>>927269
>I suppose the answer to my OP was there is nothing stopping anyone from doing this strategy.
If that's what you've taken away from this thread, then surely you'll be a billionaire within a few years. Make sure to stop by /biz/ when that happens so you can remind us how foolish we all were.

>>927264
>I'll go get some individual cases and be back
Oh joy ... we're going to get some self-selected anecdotal examples instead of OP simply reading any one of the dozens of peer-reviewed academic studies looking at this exact question. I can hardly wait....

>>927273
>>927279
>ATW
>Ex date 9/29/15
>payout of $1.43/share
Buy 1000 shares @ $14.56 on 9/28/15
Sell 1000 shares @ $14.81 on 9/30/15
>Collect $1,430 in dividends without even accounting for the rise in stock price.

Should I present another example or can you now explain why this wont work?

>>927286
see>>927244
>If the stock doesn't fall on the ex-dividend date, then there are other factors at play. Perhaps the broad stock market is up, there was an analyst upgrade, or an increased earnings range.

>>927286
>gives one example
>doesn't adjust for market conditions
/biz/ is going to shit if this counts as a serious thread.

Good luck with your strategy OP. You're not worth any more of my time.

>>927299
>would you like more examples?
Ill get another. ATW wasnt cherry picked. That was the first dividend stock I looked at in my portfolio. Ill do the next one and just go down the line.

>>927292
Its just really hard to believe the market dials something so precise directly into the stock price the minute it happens. The market just isnt that effecient

Ill go down the list in my portfolio...

>XOM
>8/11/15
>$0.73
Buy 1k shares on 8/10 @ $78.75
Sell 1k shares on 8/12 @ $78.79
>collect $730 in dividends

>RDC
>8/7/15
>$0.10
Buy 1k shares on 8/6 @ $17.78
Sell 1k shares on 8/10 (Monday) @ $18.10
>collect $100 dividends

Anon: 3
/biz/: 0

These prices arent even showing any sign of the dividend, 3/3 times the price actually went up a bit.

Ok heres one where the price DID actually dip, then popped right back up.

>RIG
>8/21
>$0.15
Buy 1k shares on 8/20 @ $13.25
Sell 1k shares on 8/28 @$13.59
>Collect $150 dividends

So there you held an extra week. Of course it would be much more lucrative with the higher yielders, but I have yet to see an example where this doesnt work

>>927029
DELETE THIS THREAD

>>927332
Ok, m8. Ill stop posting examples. Those were 4 stocks from my portfolio I pulled out my ass that rekked every explanation in the thread

Im sure theres an answer to the question at hand. Not sure why I thoight a frog posting board would have it ...

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>>927350
I was saying you are posting a way of abusing the system that faggots on /biz/ don't like to acknowledge even exists.

I'm over here trying to make shekels and your publically announcing my plans.

I bought 20 shares of at&t. My retarded logic thinks that their 5.5% dividend will basically double in shares in about 20 years... Maybe?

>>927360
Ha you'll need a lot of capital to make it worthwhile, but a 5% yielder on a million $ is still $50k. Im sure theres an actual reason this wont work, though, or everyone would be doing it already

3rd year accounting student here! The stock price will drop by the same amount of the dividend, because the CASH asset of the company will go down by that amount. So most anons are right about this. UNLESS something happens to raise the assets, the stock price drops.

>>927378
You're correct of course, but don't waste your breath. OP seems determined to remain ignorant.

>>927226
What is a "discount rate"?

>>927331
Foresight is 20/20. Go use your technique and come back to let us know how well you did

>>927395
Discount rate is the rate used to discount cash flows from the future, and it's used to find the present value of cash flows. We need to discount any future cash flows because $1 received today is worth more than $1 received one year from now. If our discount rate is 10%, then $1 received one year from now has a present value of 1/(1+10%) = $.909 and $1 received 2 years from now would have a present value of $.826.

Here's another way to think about it: we could invest $.909 today at a 10% interest rate and one year from now have $1.

For stocks, the discount rate can be estimated using formulas like CAPM.

Sorry if that was a poor explanation.

>>927378
So why was this not the case in 4 out of the first 4 examples I pulled?

I understand whatbyou are saying in theory, but how can the market act this efficiently? There are many other scenarios where a company can lose cash assets from their balance sheet that do not instantly price in so precisely as you are claiming. I mean, it's 2015, come on people. A simple run through the charts of a few div stocks will show you that, more often than not, this just doesnt happen.

Or did you all just smile and nod when your professor told you the market instantly prices in lost cash assets perfectly?

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>dividend pays out
>stock price is up 5% within a week
>make money on dividends and selling shares

why shouldn't I be doing this again /biz/?

>>927286
are these # using DRIP?

>>927402
Please be a troll. You have GOT to be a fucking troll. I can't believe that anyone is this stupid or willingly ignorant.

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>dividend pays out
>next day stocks shoot up $.50

wtf /biz/?

http://www.investopedia.com/ask/answers/137.asp

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>get dividend
>2 days later its back where it was

b-but I thought the company was supposed to dip after dividends?

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OMG. It's like after the dividend paid out the company was permanently downsized due to loss of cashflow! Oh wait it was back up the very next day.

the charts above are talking about dividends paid on one day, but they announce it weeks in advanced, and the date you must own it is generally before the day they announce it, so thats why you dont see the jump on the day they are paid, also its priced in to the yield of the stock, div + yield = total yield

>>927401
It was a great explanation tbh.

For CDs and bonds I can use the interest rate to discount future cash flows. Is that right?

How do I find it for Stocks?

why dont people buy puts the day before dividends then?

>>927420
>For CDs and bonds I can use the interest rate to discount future cash flows. Is that right?
Yes, that's right.

>How do I find it for Stocks?
It's a bit more complex because there are multiple formulas that can be used to derive the discount rate for equities, and all involve a degree of estimation. A basic calculation can be found at http://www.investopedia.com/terms/c/capm.asp

>>927421
Because it doesnt actually happen. Ive proved in multiple examples that the market doesnt treat dividend ex dates the way a few anons ITT are trying to push. Anyone who has ever even watched stocks knows the market does not instantly price in lost cash at dollar for dollar rates. That is patently absurd.

>>927029
yes, its called dividend stripping

it rarely works since the dividends received are taxed, and the share price while not usually dropping by the full amount of the dividend issued, tends to drop anyway

>>927421
Ignore >>927438

Dividends increase the price of a put option, so that's why it doesn't make sense just to buy a ton of puts before a stock goes ex-dividend.

>>927218
EVERYTHING is calculated in the stock price. If you come up with some genius idea, just assume most people knew that long before you, and the richest people knew that long before them.

Dividend is about to be paid: price rises to equilibrium where dividend cash is about equal to increased value in stock price (eg stock is still same)

Dividend is paid: stock price returns to normal and drops something more, because it is now longer until another dividend is paid and also the company now has net assets.

Dividend is cut: indicates that company expects itself not to do well in foreseeable future and/or shareholders benefit less from shares through lesser dividends, thus think their money is better elsewhere and start selling

Note that not all companies distribute dividends. Most notably Google thinks it's a better idea to re-invest any excess money in different projects and even different fields which arguably is part of the reason why they now control our lives. Buffet also believes it's better for companies to reinvest dividend because the increased company value (and thus stock value) is worth more than cash on hand.

>>927448
*less net assets

>>927446
Thank you based anon.

>As a result, when a stock pays out a dividend, one would expect the price of the stock to fall by the amount equal to the dividend since that amount of value has been extracted and is no longer available to new purchasers of the stocks.
>However, in reality, practice seems to diverge from this theory (i.e. the stock usually falls by less than this amount). This has given rise to a possible (somewhat disputed) short-term trading strategy know as "dividend stripping" or "dividend capture" discussed below.

http://www.stockopedia.com/content/dividend-stripping-is-it-worth-playing-the-ex-div-calendar-67048/#.dpuf

>>927451
Anyone ITT who continued arguing that the market prices-in lost cash at dollar for dollar rates confirmed for never having bought a stock in their life

>more /biz/ college kids BTFO

>>927451
>>However, in reality, practice seems to diverge from this theory (i.e. the stock usually falls by less than this amount).
This was explained earlier in the thread you dolt. The stock may decrease by less than the dividend depending on the tax rates of shareholders.

>>927456
calm down, you didnt btfo anyone

youre advocating for a strategy that hardly ever works due to the taxability of dividend income

>>927407
Ok let me get his straight. PLEASE ANSWER ME /BIZ/.

So say I see a 10 year history of a stock paying quarterly dividends. Like in this picture if the dividend was on Feb 3 every year for the past 10 years why wouldn't I just buy the stock on Feb 2 and get the dividend.

other websites are saying stuff about ex dividend dates and record dates and a company announcing their dividends but I literally have no idea what any of that means.

Can someone explain this to me like I am fucking 5 years old. Why can't I buy them a day before the dividend. Where do you go to hear a company announcing their dividends.

>>927463
http://www.sec.gov/answers/dividen.htm

>>927461
this

even if the stock drops say 20% less than the dividend value paid out, but you pay 25% tax over dividend, you'd still book a loss.

although in most countries stock losses are tax deductible, this would count as a wash sale meaning you can't deduct it

>>927463
You absolutely can do this and it is a strategy that is commonly used. However you will need massive amounts of capital to make it worthwhile. You will also have to deal with college kids on a roleplaying imageboard who tell you it is impossible because Mr. Market prices-in lost cash assets perfectly, dollar for dollar.

>>927470
no, stop it, this isnt a viable form of arbitrage

its possible, sure, but not at all constant and very rarely profitable, especially after the SEC clamped down on repatriating the divident proceeds elsewhere to avoid taxes

>>927230
An upcoming dividend payout is a factor against selling then. It all gets priced in.

>>927470
>>927466
Wouldn't this shit work great if you held onto the stock for a week or two until it climbed back up?

What kind of dumbass would try to sell their stock on the day after the ex-dividend day if the market price had gone down?

Doesn't that break the buy-low sell-high rule?

>>927461
>taxability of dividend income
There lies the correct answer for where the catch in the strategy is. At no point was I saying I planned on doing it. I just wanted to know why it wouldnt work. The dollar for dollar lost cash explanation is pants on head retarded if you know anything about how prices move. The tax issue is concrete

>>927479
Yeah that would work fine. You still have the tax oroblem. But a quick glance over any div stock chart will show you they pop right back up if any drop off at all

I think it's funny how many people think that dividend cuts only mean a company is doing bad, what they fail to understand is that sometimes companies will release more shares for investment activites in order to grow the company, but since they released more shares it means they have to pay dividend to more shares

/biz/ is not really a place to ask about dividends. Everyone on /biz/ thinks they are master traders and most don't know anything about anything.

>>927479
we are discussing hypothetical strategies that minimize risk and maximize return (emphasis on hypothetical)

stock prices fall after the ex dividend and payout dates, that is proven through most market data. for the purposes of the strategy, which would only consider the impact of dividend payouts on stock price and by extension the profitability of the strategy, the work is done, there is no more to be said.

if the stock price rises in the week following the dividend payout, it certainly isnt because of anything related to the dividend payout, rather it would be due to all sorts of other factors that impact the stock price, which cannot be satisfactorily accounted for in a simple dividend stripping/arbitrage strategy

so in essence, holding the stock after the dividend payout is the start of another different strategy, which youd have to account for and quantify all the new inherent risks

>>927487
Yes, this as well. Share buybacks can be much preferred over a dividend, since it creates lasting value in less dilution

How do I find dividend announcement dates.

I see this stock
NYSE:CIM

I see that it has been paying out a $0.5 dividend every quarter for 10 years.

Where do I go to find it's announcement date so I can know when I have to buy the stock.

>>927495
You should be able to figure it out pretty easily. Add 3 months to the last one. Come on anon. Its 2015

>>927495
http://www.nasdaq.com/symbol/cim/dividend-history

http://finance.yahoo.com/news/chimera-investment-corporation-announces-effectiveness-210400745.html

with high paying dividend stocks you need to be careful of dilution of shares and then later reverse splits or buy backs

If you are going to look at only the dividend and not what the company has been doing or is going to do with the shares of the company you are going to lose all your gains from dividends with the drop in stock price.

My suggestion is to follow a high dividend paying stock for awhile until you see the opportunity

>>927029

Because you have to be an investor on record a certain date before the dividend is issued. Usually this is several weeks to a month before hand.

Take a look at this page for Microsoft http://www.nasdaq.com/symbol/msft/dividend-history

The last dividend was announced on 9/15/2015, you have to be an investor on record as of 11/19/2015, and the dividend is issued on 12/10/2015.

Seriously, lot of people pissing on you for it, but just build a dividend income portfolio and be done with it.

Ok OP's question is dumb, but what is stopping you from owning shares and buying puts so you earn the dividend but also benefit from the depreciation of the ex dividend date?

>>927590
puts (and calls) exercise prices are adjusted to reflect the div

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>>927029
Usually company LOCKS i the list of guyswho are eligible to get the dividend some time before the payout happens.

Also generally at dividend payment the stock price is usually in its highest, which in turn violates the rule of selling high and buying low. But yes you can hold the stock and it will probably climb because company is growing, pays dividends and everyone wants to hop on a bandwagon. But doing that couple of days before the payout is silly.

In my case its much more profitable to buy right after dividend and wait for the next one. And then sell for whatever reason. (Id the company is good, id not sell tbh)

Secondly consider you are the owner that puts company on a market, wouldnt you REALLY plant some hurdles for guys who want put their money in for 2 weeks, get paid for it , and sell for profit? Its like having a huge sign out - HEY TAKE ALL MY MONEY FOR PROFIT!!!

>>927590
fuck me

OP is dumb for asking why an obvious inefficiency doesn't exist

you now want to ask why another obvious inefficiency doesn't exist while also acknowledging that the OP's question is dumb? As if no options marketmaker has ever considered the effect of dividends?
Seriously just think about what you're asking.

>>927719
Hey stupid,

If you read the thread, youll see this is an actual strategy called dividend stripping. Happens all the time

>>927745

That has nothing to do with put options, and honestly buying the dividend dip is really nothing more than a momentum strategy -- you're assuming the price will fill the gap because the company has solid fundamentals

>>927745
>this is an actual strategy called dividend stripping
Just because it has a name doesn't mean its not pants-on-head retarded. Lots of stupid, failed strategies have a name.

Example:
>You have a name.
>You're retarded as fuck.

Case proved, according to your rigorous criteria.

>>927844
Once again, read the thread.

I picked four div stocks out of my ass at random. Dividend stripping worked in 4 out of 4 cases.

I understand you are trying to impress kids on the internet with your cool memetext and name-calling, but the only "pants-on-head retarded" statements in this thread have been the ones arguing that the market instantly prices in lost cash assets at a dollar for dollar rate. Anyone who has ever even owned a single stock should understand this.

>>927861
>the ones arguing that ...
That's not the question you asked, and that has no effect on the strategy you're espousing. The only relevant question is whether "dividend stripping" is reliably more profitable (on a risk adjusted basis) than other alternatives. Stop moving the goalposts.

Furthermore, its been proven by academic studies that your meme strategy doesn't work.

So there's not much left to do here except make fun of you for being such a dumbass, and for being too stupid to look this up before you embarrassed yourself by making this thread. By insulting you, I'm both on-topic and doing a favor to the /biz/ community.

>rekt

>>927868
Except it does work and has been proven to work multiple times. Your only argument against it is the ridiculous dollar for dollar instant lost cash efficient market theory BS.

>>927905
How old are you?
No need to lie; this is 4chan, after all.

>>927908
Just stop, bro. You are all patently wrong. Read a fucking book. Is dividend stripping a perfectly risk free strategy? No. Neither is any investment strategy. It IS a strategy that has been PROVEN to beat indexes by SIX PERCENT over a month and a half. Fuck, this is like arguing real world field work with engineers. /biz/ really is just full of econ students who have never touched an actual stock

>Examination of historical dividend and share price data by Dividends.com.au shows that dividend stripping of S&P/ASX200 index shares can provide a 6 per cent-plus edge over the index for a holding period of 46 days, assuming simple guidelines are followed

http://www.afr.com/personal-finance/shares/dividend-stripping-is-a-dangerous-dance-20150317-1m142v

just stopped by to let OP know he's retarded, even when presented with good explanations as to why he is wrong.

>>927943
Read the thread while you're here, collegefriend. You can bring back some reallife knowledge to discuss with your econ professor

http://www.thebull.com.au/experts/a/262-what-does-dividend-stripping-mean.html

>'Dividend stripping’ traditionally has been a popular strategy with active investors, looking to generate franked income via the purchase of physical shares prior to a declared dividend being paid by a company

Most stock value increase isn't in dividends payout so this strategy would never beat the market

>>927950

Most active investors don't beat the market so who gives a fuck

>>927953
Thats a thought for a different thread, anon. There are plenty of ETF threads for you to argue that point ad nauseum.

>>927269
Yeh, in reality it doesnt always go down by as much as the dividend, so this strategy can get you instant profits.

>>927957
Just want to say I appreciate you spreading some real world knowledge. Thank you!

>>927964
>>927967
Thanks anons. Group think by all the econ major kids on this board can make this place as bad as /pol/ sometimes. Its always worth digging into the charts and financials for yourself to verify what you are told before accepting it as fact

>>927905
>Except it does work and has been proven to work multiple times.

>Coin flipping does work and has been proven to work 50% of the time.

Fuck, you're literally retarded.

>>927448
Assuming the company is indiferent between reinvesting (ie. Share price growth) or dividends, I thought the logic to reinvesting cash back into the biz rather than paying a dividend is simply if the biz can get a better rate of return on their projects than shareholders would be able to with the cash, ie. If your projects have a higher expected rate of return than the market then reinvest, and if not, then pay a dividend. Ofc the tricky part is predicting expected return of the market

>>927979
Strawman is not a valid argument, anon. Read the thread if you would like to educate yourself before contributing. There are multiple articles posted explaining dividend stripping and how it works.

>>927999

There all just finance voodoo to sucker you into a managed account. If we are going to be honest here

>>927479
Yeah but that's just the same as going long. Also it might not take a week to go back up, it may take longer - much longer, meaning you can have your capital tied up for much longer than intended.

>>928022
Still, there are energy companies currently paying 30 to 40% yields with a ton of volatility. I understand there is no guaruntee you instantly get the same price back, but you can lock in 10% by collecting the dividend and then play the volatilty on the sell as a lot of these stocks are all over the place as crude fluctuates

>>927999
>There are multiple articles posted explaining dividend stripping and why it doesn't work

FTFY, because you're retarded.

>>928035

Yeah that is great in theory now lets see you actually hit the timing well enough to beat the market

>>928059
Try to catch up, anon. We arent here to pull you along. The conversation has moved from whether this is a viable strategy to how it would be succesfully implemented

>>928064
Im gonna spend some time today putting together a trade that will test this out. Ill post details when I get the time to pour over some high yielders

>>928067
>The conversation has moved from whether this is a viable strategy to how it would be succesfully implemented
Only in your head. No one with a brain thinks this is a "viable strategy" in large part because its been investigated, studies, reviewed, and tried for 40 years and conclusively proven not to be a viable strategy.

But you're in denial, or trolling. Either way, you're retarded.

>>928079
Try reading the thread, anon. There are multiple examples demonstrating succesful dividend stripping as well as articles documenting that this is a very common practice.

In fact, the only argument against dividend stripping ITT is the patently absurd notion that the market prices in lost cash assets instantly at a perfect rate. If you have ever owned a stock, you know this is not true.

I stated that I am putting together a trade to test the best way to implement this strategy, using volatility in energy stocks to succesfully execute a positive trade. If this isnt interesting to you, thats fine. However, Im sure there are anons ITT who would be interested in the results. Ill post the trade later tonight, screencap, and check back when its completed

>>928093
>There are multiple examples demonstrating succesful dividend stripping

>There are several example of flipping a coin and correctly calling the result.

Stop. being. retarded. You obviously have no clue what risk-adjusted results are, and you should leave /biz/. Also, you're retarded.

>>928093
You are either the best or the worst troll I've seen this year.

>>928106
>>928107
Hah I have never seen this amount of stubborness, even on the internet.

Multiple articles posted detailing how this strategy is implemented every single day by successful investors. How can you possibly refute that?

Sometimes, when your econ professor explains something to you, he does a quick review of the generalities to set the basics for the next lesson. Often, you will learn that these things are not set in stone. It would behoove you both to pay attention and check back later tonight to see the trades I will assemble.

>>928129
>How can you possibly refute that?
Hmm, how could I refute that? Perhaps with dozens of peer-review academic studies proving the strategy produces no risk-adjusted alpha?

Of course, since you can barely read, this won't be helpful for you. Unfortunately Google Translate doesn't do English-to-Retard.

>>928136
Post them.

Ill be waiting with baited breath

>>928129
>How can you possibly refute that?
why bother? you're an idiot. do it and make your millions if you think it would work out

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>>928164
Jesus christ, don't be such a lazy faggot. You'll never make any money being a passive little bitch. Put in some effort.

>>928183
Well over half half of those articles are supporting dividend stripping, whether for tax purposes or pure profiting. Are you sure you read and understand the thread, anon?

>>928183
>"why do stock prices drop by less than the dividend?"
>"...the price drop is expressly less than the dividend..."
>"past studies have proven a price drop less than the dividend"
You are literally proving OP's point. Confirmed for not understanding the underlying issue

Haha OP was right the whole fucking time. Srsly looking forward to seeing the test trade tonight

>>927745
you really are a fucking retard if you think put options are going to be mispriced so as to give you an obvious edge like that... go ahead and try it though

>>928210
>>928214
Fuck, are you both seriously this retarded? The tax effect is why the price change isn't commensurate. You can't flip the logic and prove the premise from the conclusion. Even OP finally understood this after a day of explaining, and he's a certified autist.

>>927302
25c div not $1.43
14.56 close vs 14.35 open
P/L =4c
>>927302
XOM 78.75 close vs 77.01 open
P/L = -$1.01
>>927325
RDC 17.79 close vs 17.34 open
P/L = -$0.35
>>927331
RIG 13.27 close vs 13.19 open
P/L = $0.07

OP you'd be down overall and then there's commission.
If you're selling at any other time/date than the next day's open you're basically betting on the market will rally.

>>928239
U r focking slow m8.

The fact that the tax is already covered by the spread in price drop and dividend has jack shit to do with OPs plan. Hes buying and selling at THE SAME price you slow fuck.

>>928247
>what are limits and stops?

>>928248
>thinking this avoids the tax consequences
Fuck, this thread has hit new lows. Didn't think that was possible.

>>928250
How are limits and stops even related?
He's talking about div stripping

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Ok, cunts. OP here

I wrote up the study were gonna do. (Pics related)

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I see most of the anons trying to defend my position here have missed it completely.

Im off to round up 3 high yielders with upcoming div ex dates... ill post later tonight so check back

>>928318
>>928312
Quite possibly the best-designed, most rigorous research proposal I've ever seen. The results will be indisputable.

>>928312
No one said it can't be done profitably you retarded cunt. What you were told is that it's not more profitable than conventional investment strategies on a risk-adjusted basis after taxes.

For fucks sake OP, stop being so stupid.

>/coin-flipping general/

>>927029
People do that and make money doing it I'm sure, but I'm also sure loads of people underestimate the amount of lively shareholder hands are willing to supply any excess flaky short-term buying the day before the dividend comes out. Stocks can be tanked with just 5% of the commons going for sale on a given day, a noob would think it'd only go down 5% but it can go down 50%. And that still leaves the holders with 95% of the shares in this metaphor, get the picture?

>>928332
>backtracking this hard.
You're sounding about as logical as the Bogleheads who say its absolutely impossible to beat the S&P, anon. "Risk-adjusted" is such an arbitrary term, you cant possibly quantify it in this scenario. If I collect divs off all 3 stocks and flip them the next day, it could be a profit of 7 or 8% in two days even after taxes. Thats very hard to otherwise attain. If it doesnt, it doesnt. We'll see what happens, right?

>>927233
Not typically in the fortune 500 but that's because demand is consistant and supply is tight. Outside of the fortune 500 structure many stocks flop after the dividend because most non fortune stocks with commons get played for the easy profits, that's the whole reason they went public in the first place; for easy cash. Once the easy cash dries up or holders sell their leverage they'll move on to another stock and let the old stock sink but this isn't the case for fortune 500.

Dig a hole in the ground
Put $10000 in it
Pull $100 out one day
Pull the rest out some time later

This method is more tax efficient with lower risk

>>928340
>"Risk-adjusted" is such an arbitrary term, you cant possibly quantify it in this scenario.
Are you part of the pride or not? Loss of capital gains isn't the only risk posed by participating in the financial world.

>>928340
>the Bogleheads who say its absolutely impossible to beat the S&P
Which is none of the Bogleheads.

OP, get that strawman dick out of your ass. Your bullshit is getting so thick even the punters of average intelligence have caught on that you're a troll.

Of course, I realized what a giant faggot you were yesterday. But you're so retarded that you can't even even troll well. So thanks for the entertainment.

>>928348
Since were essentially just going long, until you know the stock I choose, how can you possibly say this is any riskier than another investment vehicle?

>>928340
>If I collect divs off all 3 stocks and flip them the next day, it could be a profit of 7 or 8% in two days even after taxes.
Most quarterly dividends bring in around a 1%-2% profit, after taxes that's a 0.75%-1.5% profit. You can make that much playing swaps on currencies using leverage on a daily basis, and quarterly dividends only come once per quarter, there are hardly 100 US based blue-chips to pick from, 365 days in a year. That's optimally about 100% reliable gains per year when the street performs green, some kid in high school could beat that swing trading with 3 months of experience with 1% of the effort.

>>928357
How much do you trust your brokerage firm? How secure is it?

>>928362
We're talking about 30 to 40% yielders in volatile sectors. Theres been anons, myself included, who have been profitting from energy stock volatility all year. Nobody bats an eye. All Im suggesting is you swoop some dividends in the process and everyone loses their fucking minds

Ill be back later with my 3 picks. Hold you buttholes tight

>>928368
A reasonable strategy but very dependent on trading conditions not being hostile, which they frequently are, for about 5 years out of every 20. And with Keynesianism outliving it's function bouts of hostility could become more severe and frequent in the future.

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So here they are...

I decided to just track the next 5 stocks that hit their ex date on Tuesday (since from what Ive read, you must own a stock three days before the record date to collect). This way I can start the trade on Monday and there will be no hollering of foul play. Tuesday will be the ex date, Thursday, the day of record, and the selling will begin Friday. Here are the 3 buys and their dividends:

>BGH, $0.162
>CODI, $0.36
>CVS, $0.35
>LEN, $0.04
>LTC, $0.18

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I'm "buying" $10k of each stock. We'll figure out the tax ramifications next week.

This is gonna be fun, we should do this more often, guys.

>>928477
Now you made this thread intresting

>>928477
>I'm "buying" $10k of each stock.
>"buying"
>quote-buying-quote
What a massive faggot.

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>>927029
>"EQUITIES IN DALLAS!!!

...is probably the only apropriate answer to your question. But given the nature of your question you would not understand what I mean.

Nevermind.

On an unrelated note: do not EVER consider investing in stocks or pursue a carreer in an industry linked to capital markets.

>>928968
As if using real money changes anything. We'll see what happens next week, anon. I got plenty of screencaps OTT to start up the next one.

Got any predictions you wanna make?

My predictions:
>3 out of the 5 trades go exactly as planned, stripping the dividend on Thursday and selling on Friday at the buy price
>2 trades take till the following week or possibly two to sell at the buy price
>all the dividends are collected and we turn a tidy profit, ending the experiment when the last stock sells in two weeks
>we end the experiment with our $50k initial investment in hand as well as a few %s of profit.

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>>927029
typical question at /biz/

>>929167
>Got any predictions you wanna make?
You'll fail to adjust for risk, making any comparisons bogus.
You'll fail to correct for market changes, making any comparisons bogus.
You'll post incorrect data because you're too stupid to correctly calculate ROI.
If the (incorrect) data you do collect fails to support your position, you'll disappear like a fart in the wind.

Retard.

>>927029
Let's say a billionaire buys millions of stock for 1% dividend at market price on that day. The price will incease duw to it's demand when you are buying it. The price will decrease right after due to excessive sellers because they know the stock is overvalued. Next day you get 1% divided but lose 2-5% of stock value. Meaning, you lost more than you gained.

Is it really the accepted theory that stock price drops by the amount of the dividend that is paid out because the drop correlates exactly with the drop in cash assets in the business?

Maybe on the accounting books, but not outside of it. I agree that it's a factor, and a very influential factor and consideration and cause, but it's not exact or always true. The stock market is a secondary market that is inefficient at reflecting a business's standing (notice I said inefficient, not inaccurate, though it's sometimes inaccurate, too, but I'm saying here that it's not going to react that quickly or properly and is inefficient). The stock value on the SECONDARY MARKET shouldn't go down by the exact amount of the dividend, that's fucking crazy talk.

Also another factor to consider (if the declaration and paid dates aren't too far apart and you're required to hold the stock on the pay date), if you hold stock in a company that regularly gives dividends, you're not going to sell it a few months before the dividends are paid out and miss out on that. Regular dividend payments inflate the stockholders hanging on for a few months as people won't let go and sell the stock, and then the glut of sellers afterwards is going to drag the price down as the regular holders wanting to sell and waiting for the dividend, and also those engaged in dividend stripping, all sell at once.

I don't think OP's question was stupid, and I swear that Edward Jones uses dividend stripping as a major tactic, but it did need the holes pointed out in it (taxes, a bad market, needing a lot of capital, etc.). And I see a lot of answers from the academic realm and not from application or working assessment, either.

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the amount of misinformation and derp in this thread is record breaking

>>929351
Thanks, anon. This has been my position the entire time. Every argument against me has been the efficient market thing, which is patently absurd. I mean, read the thread. It's been brutal.

Im running a pretty straightforward experiment next week to see what happens. You can check it out here: >>928470 >>928477

I'm keeping it simple and will just track 5 stocks through a dividend week and see what happens. Ill post results next week.


>>929303
Its not a scientific study, anon. Its just a simple test to see what happens when you try to strip the first 5 dividend stocks that pop up.

And I won't dissapear. I will make this thread again next week if this one 404s and we can all pour over the results, regardless of what they are

>>929367
>Its not a scientific study, anon. Its just a simple test to see what happens
Then why bother? In addition to your methodology errors, your sample size is too small and your testing periods too short for meaningful results. So whatever you come up with is completely useless, regardless of the outcome.

Stop being an attention whore. Do it correctly, or don't bother. And since you lack the intellectual capacity to do it correctly, don't bother.

>>929372
Because this entire thread has pointed out the disconnect between actual investors and econ students. The actual investor (me) looks for inefficiencies in the market to exploit for profit. The econ student (you) imagines the market as a perfect place that as long as all your equations are done properly, will price in a balance sheet instantly at perfect dollar for dollar rates.

If 5 out of the 5 stocks turn over at break even within the week and the dividends are stripped, all that matters in the real world is we made "X" amount of money. Itll be fun. Hang in their and try not to get too butthurt when I dont calculate in betas and other such intangible things. Ourside of your econ class, you wont use these nearly as much as you would think.

You can bring the results back to class and discuss them with your professor next week

>>927029
the exdividend date and the day in which you receive the dividend are different

>>929367
I'm not supporting your entire position; I'm just disagreeing with parts of the opposing sides. If you are running an "experiment," make sure you have the dates correct and you purchase things on time. I don't think it's going to prove anything, but I will laugh if the market in general tanks on you.

>>929380
>all that matters in the real world is we made "X" amount of money
Wrong. What matters is whether you could have made more than "X" pursuing an alternative strategy, in each case adjusted for risk.

Any punter (even you) can make "X" in savings account. Profit isn't the goal. Profit is easy, stupidly easy. Optimal profit is a whole other world.

(I know this is all going over your head, so don't worry. I'm posting this for others, not you.)

Maybe you should take one of those econ classes you insult. You don't know a fucking thing about money.

>>927745
>Happens all the time

No you moron, the whole point of me bringing it up was to show that NO ONE does it because it's fundamentally inefficient

>>929402
I dont have a position. Im just stating the obvious that the only reason against dividend stripping ITT is patently absurd.

I really started the thread hoping someone would explain why it wont work. No one did, except railed on me for not buying the efficient market bs. The more I read, the more I find that people actually do dividend strip all the time. Whether its more profitable on average than other strategies, I dont know.

Maybe all 5 stocks will drop off and take years to recover. Who knows? We'll find out next week.

>>929422
You're still talking like an academic, anon, not an investor. There is no single, perfectly optimized method for profitting from equities. There are only imbalances that can be exploited. You could have ran a hundred formulas over VLKAY and seen one of the most solid companies on Earth, until a few weeks ago when they failed an emmissions test. The moral is that equity prices are not just numbers on a paper. They represent such intangibles as investor sentiment, corruption, faith in management. Pure valuations like you are talking about only get you so far. You can keep calling me names but you havent even presented a case as to why dividend stripping wouldnt work.

>>929467
TL;DR: I dont doubt that dividend stripping wont work. I would just like to know why other than the efficient market, dollar for dollar bs