Definition
Dividend capture involves buying stocks just before the ex-dividend date to receive the dividend, then selling shortly after. The strategy attempts to profit from dividends plus any price movement. However, stocks typically drop by approximately the dividend amount on ex-date, making consistent profits challenging after taxes and costs.
Example
Buy stock at $50 before $1 ex-dividend. Receive $1 dividend, stock drops to $49. Net gain depends on subsequent price movement.
FAQ
What is Dividend Capture Strategy?
Buying stocks before ex-dividend date to collect the dividend.
Why is Dividend Capture Strategy important?
Dividend Capture Strategy helps investors evaluate dividends and make more informed decisions.
Related Terms
Ex-Dividend Date
The date on which a stock begins trading without the right to receive the declared dividend.
Dividend Yield
A financial ratio showing how much a company pays in dividends relative to its stock price.
Qualified Dividend
A dividend taxed at lower capital gains rates rather than ordinary income rates.