Share trading and dividends

[MarillionFan]

Boredom.

Forget the rest of these Naysayers.

Actually, yes I do something similar. I take downloads from here Dividend Payment Dates - FTSE, LSE, AIM
which is quite useful and I drop it into an excel VBA macro I have that scans the prices on a daily basis.

I look a few months out and if the share drops for a while (especially when adjusting), I'll perhaps buy in on a few. What tends to happen is the month before the share price starts to move up a little, then will drop after the payout. I've found that buying in at the right time seems to get me a better net yield. According to my share spreadsheet I seem to make an average of 2.7% on the shares(over the last 5 years worth of short term trades) I bought in a couple of months before versus when I sell when it goes ex-dividend.

Perhaps doing a div reinvestment and keeping them would be better in the long term, but it stems back from day trading days.

You're definitely on to something.

[Zylon]

Re the different types of investor - there's also extensive evidence that amateur investors' long-term returns are lower the more often they make trades. In fact at the extreme, the average amateur 'day-trader' manages to make a loss even before the exorbitant platform and trading fees are taken into account.

That's not to say you should never sell, but the evidence is that those who do so more than very occasionally end up earning less in the long term.

[RSoles]

3rd type. Buy shares with a view to keeping them a long time, but keep an eye on them and sell where necessary. Re-invest any dividend income in more shares (not necessarily in the same plc that issued the dividend). Buy more shares every now and then.

This is what I do. I also wait until a reasonable amount of dividends has accumulated, say a minimum of £2k(to keep trading costs down), then probably buy a new share with a decent dividend in a new sector ( to give diversification).

I have also bought some distressed shares which don't pay dividends, one on these has been a spectacular success, others not so much. This is a more risky approach.

[WordIsBond]

but you don't ask....

....you never get sarcastic responses....

Fair point. But to be fair to myself (I ALWAYS make sure I'm AT LEAST fair to myself ), I did give you a detailed, substantive response to your question, as well as the sarcasm, didn't I?

[diseasex]

to sum this up its all down to yield. If a share is trading at 100£ and give 10£ dividend , thats 10% yield yearly. So you pay 100 to get 10 yearly. Get it? If then after 3 years stock is trading at 70 and dividend hasn't changed, you still get 10% yearly of your invested capital.

[NotAllThere]

There are two types of shareholder, you either buy a tulip load of shares, hold it for a few seconds and the sell for a small profit multiplied buy a tulip load, or you buy shares forget about them and keep taking the dividend income, as others have said the pre and post ex-dividend price is usually more than the dividend

3rd type. Buy shares with a view to keeping them a long time, but keep an eye on them and sell where necessary. Re-invest any dividend income in more shares (not necessarily in the same plc that issued the dividend). Buy more shares every now and then.

[SimonMac]

There are two types of shareholder, you either buy a tulip load of shared, hold it for a few seconds and the sell for a small profit multiplied buy a tulip load, or you buy shares forget about them and keep taking the dividend income, as others have said the pre and post ex-dividend price is usually more than the dividend

[b0redom]

Ok, basically what I thought the answer would be, but you don't ask....

....you never get sarcastic responses....

[Lance]

Share prices are always higher "cum div". Once the declaration date has passed, the "ex div" price will be discounted, usually by the the dividend amount.

This is one reason why Apple, and other US stocks, are so high right now. When trump slashes corp tax from 39% to 15% loads of multi nationals will bring their offshore cash back to the us and cough up loads of dividends. IMO

[WordIsBond]

What an incredible idea! No one ever thought of that before, I bet! You shouldn't have posted this publicly, others might catch on!

Actually, when a share goes ex-dividend, the price drops by the amount of the dividend, because everyone has thought of this. So if the share is worth five quid, but everyone expects it to pay a dividend of 10p next month, it's going to trade at £5.08 today, £5.09 in a fortnight, and £5.10 about the time a dividend is expected. Then, the dividend takes place and the share price drops back to five quid.

Superimposed on that behaviour is all the usual market fluctuation (the underlying value of the share won't stay at £5, it might bounce between £4.95 and £5.05 without any real change in value. And then things change in company performance or the economy or the company's particular market that can affect the price as well. Those things may partially obscure the general pattern I mentioned, but it's still there -- when a share goes ex-dividend, its price immediately drops by the value of the dividend.

The best way to make easy money in the stock market is to buy next year's newspaper and look at what share prices will be a year from now. If you can't time travel, the other way to do it is to invest in well-managed low-debt companies with good products (that aren't going to be undercut by new inventions) and decent price/earnings ratio, and buy and hold. If they are making money, it's going to eventually result in dividends or higher share prices, or both.

If you try to do short-term stuff based on guessing what's going to go up and down when, you will have a exciting but bumpy ride that probably ends up costing you money. If you buy shares of companies that are making money and are going to keep on making money, you probably will, too, even if it takes some time.

[SueEllen]

Share prices are always higher "cum div". Once the declaration date has passed, the "ex div" price will be discounted, usually by the the dividend amount.

This^^^

People also buy on anticipation of a good dividend or other good news like a takeover. These can happen near each other.

Also if you got trackers following different markets over the long term they will make you money.

[rambaugh]

Companies typically announce performance results before a stock goes ex-dividend. So you'd have to do a lot of research in to the company's performance to reduce the risk of losing capital invested. Also might want to check the company's profile and previous performance indicators such as free cash flow, ROE, P/E, etc.. Overall though I think this is a silly strategy as you are up against market forces, investor sentiment, random events, etc. that are difficult if not impossible to predict and could all play against you.

[Scruff]

Share prices are always higher "cum div". Once the declaration date has passed, the "ex div" price will be discounted, usually by the the dividend amount.

[b0redom]

Hi All,
I realise there are a number of Walter Mitty types on here, but I presume at least some of you really do own a bunch of stocks and shares in an ISAs etc who are way more experienced than I am.

I've got about 50k spread through a few trackers and a few companies I've gambled on when bad news made their share prices collapse.

Looking back on previous dividend payments they always seem to pay at approximately the same time. Does anyone, as part of their investing strategy buy the stocks a couple of weeks before the announce date and then dump them as soon as the dividends pay out. The thought occurs that if you carpet bagged with say £10k, you could make some quite tidy sums.

Is that worth doing, or do market fluctuations make it not worthwile?

Cheers...

b0redom