The low interest rate environment has everyone and their dog looking for yield and income, which means a more aggressive version of dividend capture is bound to get more attention. Essentially, it involves constantly rotating between dividend paying stocks with offset dividend payment dates to dramatically increase your yield. I know I sometimes sound like a broken record, but this is another case of “in theory, theory and practice are the same, but in practice they are not.”
There are a number of reasons why this doesn’t work as smoothly as it appears to. Commissions are one big reason. Buying and selling 25 stocks quarterly means 200 trades a year. When you are trading that much you also have to consider the potential capital gains that may drag down your after-tax returns in non-registered accounts. Capital gains might be the least of your worries if you consider that stocks are supposed to drop in price on the open of their ex-dividend dates by the amount of the dividend per share to be paid out.
Source: The Globe and Mail
Related Articles:
- 10 Higher Yield Dividend Stocks
- Who Owns The Top Dividend Stocks?
- Who Owns The Top Dividend Stocks?
- Top 10 Articles For 2010
- Dividend Stocks vs. a Safe Distribution Rate
Dividend Capture Is Tough To Execute
Posted by D4L | Sunday, June 26, 2011 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
GameStop (NYSE:GME) lost about 40% of its market value over the past three years, as rising digital downloads and declining mall traffic thr...
-
In a capitalistic society, opportunities to generate (mostly) passive income are all around us. Dividend growth investing is one of the most...
-
Investors buy dividend stocks for a few reasons. For one, they provide income via dividends that act as a bonus on top of capital appreciati...
-
These elite income producers have rallied this year. Their brilliance at producing passive income seems to have caught the market's eye ...
-
If you are looking for reliable dividends, these three Dividend Kings should be right up your alley. Dividends are paid at the discretion of...
-
Buying dividend stocks can be tricky. Oftentimes, stocks that pay exorbitantly high dividends have underlying financial problems, and their ...
-
While optimism in the broader market remains robust – particularly for hyped-up sectors like technology – investors may still want to consid...
-
A strong dividend investing strategy may be to focus on high-quality names that score well on several dividend-related metrics. In other wor...
-
When many investors think about tech stocks, they often think first about high-growth names that come with outsized risk -- not mature, divi...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.