The Dividend Capture Strategy

A dividend capture strategy is an investment strategy that investors use in order to get dividends from stocks without actually holding the stock for a long period. This strategy can be beneficial and can generate nice returns if it is used correctly. Here are the basics of the dividend capture strategy.

How It Works

With this type of investment strategy, an investor will purchase a stock shortly before a dividend is issued. She will then hold the stock as long as she has to in order to get the dividend, and then she will sell it shortly afterward. By doing this, she can increase her returns because the dividend will provide her with a nice payment. 

Ex-Dividend Date

The ex-dividend date is the date when the company announces that it will issue a dividend. In order to get the dividend, you have to be a shareholder on the ex-dividend date. This really means that you have to own a stock only for that single day in order to take advantage of the dividend payment. After the ex-dividend date, you can sell the stock and still get your payment. Sometimes, the price of the stock will decrease by the amount of the dividend after the ex-dividend date.

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