As that post highlighted, the most important date on the dividend timeline is the ex-dividend date. Anybody who owns a stock prior to its ex-dividend date is entitled to receive the upcoming dividend. This is also the first day a stock will trade excluding the value of its dividend, in other words the price of a stock (or any vehicle that pays a dividend) will decrease by the amount of its dividend on that day.
The ex-dividend date can be a catalyst to capture pricing inefficiencies on that day, which is the basis of the dividend capture strategy.
Stocks and funds can have their ex-dividend date, i.e. “go ex-dividend” or “go ex” any day the market is open. You can find these stocks by going to any online dividend calendar. These calendars will usually include the stock’s (or fund’s) dividend yield, dividend payout, and frequency of the dividend.
For example, here are six stocks that are going ex-dividend this week.
|Date||Frequency of Dividend||Dividend Amount||Dividend Yield|
|Tuesday, July 31
|Thursday, August 2
Signet Jewelers (SIG)
J.B. Hunt (JBHT)
|Friday, August 3
Each of these stocks will likely begin the day trading down by approximately the amount of their dividend, as the market adjusts for the payout. This adjustment can happen in the premarket session, or if there’s no trading during the premarket it can happen after the open.
So Signet, for example, will probably trade down $0.37 at some point Thursday morning.
While this downward movement is completely normal, it can also lead to abnormal trading for a number of reasons. Maybe the adjustment brings the stock to a critical technical level, and technical traders take over the tape. Maybe some traders will see the drop and sell not realizing its benign nature.
The list above is just six stocks we picked out at random. There are over 400 stocks and funds that have their ex-dividend date this week. So keep an eye on your calendars to see when any dividend stocks and funds in your portfolio go ex.
Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.
Copyright © 2001-2020, Lightspeed, LLC. All Rights Reserved.