Dividend Capture Explained

The lure of dividends is always there. Even the novice stock trader notices that certain stocks move down suddenly on their ex-dividend date, and realizes that holders of that stock just received a tidy cash payment. It is no surprise that every trader, perhaps tired of fighting win-one lose-one battles in the volatile high-beta stocks, is eventually tempted to try the slower moving dividend stocks with their predictable payments. But to the trader, a strategy of simply buying and holding is not interesting enough. The trader wants to trade.Last time in Part 1 I wrote about the general behavior of dividend stocks, and looked at the strategy of simple buy-and-hold. Look at what happens to a company which pays a 10% dividend like clockwork -- and has no fluctuation in stock price due to such distractions as investors buying or selling their stock.... Read more