Forum Archive Index - November 2000

["div" <div@hotmail.com>]

Your idea is what is usually called "Dividend Stripping", and is talked
about in many Share Trading/Investment books.
You do not need to hold the share for a year, you are entitled to any
dividends if you hold the share on the "record" date of the dividend, so
theoretically, you could buy it on the same day (usually a friday.)

However, like any strategy, it is not guaranteed to work.
The share price will go down after the dividend, and what it does after that
is either go up or down!
up you win, down you lose....just like buying at any other time.

another strategy could be to wait until after the dividend is paid, and THEN
buy the share at the cheaper price once it has come down. But as you can
probably see, from there the share will either go up or down. it makes no
difference.

In your idea you might pay $5000 and get $500 div straight away.
In the second scenario you pay $4500 but miss out on the dividend.

The only way you win is when you correctly predict what the share price is
going to do in the time frame you are investing in....and if you cant
predict it, you are more likely to succeed the longer you hold them.


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