The dividend capture strategy is generally easier to make work with larger payouts, so monthly dividends would be inefficient, and annual payouts would be more advantageous to capture. Holding periods, therefore, can be as short as one day.ĭividends are usually paid out quarterly, but some are paid monthly, and a few stocks even pay one dividend annually. In this way, the trader owns the stock just long enough to be eligible for the dividend, and then sells the stock essentially immediately afterwards. The strategy relies upon the trader buying a dividend stock just before its ex-dividend date, and then selling right after. The strategy is an income-focused trading strategy that differs greatly from simply buying and holding, in that instead of receiving typical quarterly dividends from a few stocks, the trader attempts to receive a steady stream of dividends from a wide variety of stocks that are held for very short periods of time.ĭividend capture requires very frequent buying and selling in order to capture as many dividends as possible, which opens up the trader to higher risks, potentially higher taxes, and unfavorable capital returns. The idea behind dividend capture is simple: the income investor simply trades more often and attempts to capture the cash payouts of more stocks than would otherwise be possible by simply buying and holding. This article will discuss an alternative strategy called dividend capture. Some of these strategies work better than others – we like buying high-quality dividend stocks such as the Dividend Aristocrats and holding for the long-term. The Benefits Of The Dividend Capture Strategy This can be critical for investors that are relying upon investment income for living expenses – such as retirees – or those that are simply trying to compound wealth in the most efficient way possible before reaching retirement. There are many strategies that help investors capture higher levels of income from their capital. Sure Dividend helps investors find the best income securities for their retirement and financial freedom portfolios.
This is a guest contribution by Josh Arnold for Sure Dividend.
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