If you wait until the ex-dividend date, you've missed your chance. The market keeps this trade from being profitable by starting share trading on the ex-dividend date at the previous day's closing price minus the amount of the dividend. You don't get a dividend if you buy a stock that the day the dividend is paid. Rather, you have to understand the difference between the ex-dividend date, the record date and the payment date. As the ex-dividend date becomes closer, more buyers time their purchases to receive the dividend, thus creating additional demand and driving up the stock price. That's why this date is called the ex-dividend date – "ex" meaning without. The dividend payment date will typically be a few days to a few weeks after the record date. Most dividend-paying stocks make distributions four times a year. The value of the stock will fall by an amount roughly corresponding to the total amount paid in dividends.
If you sell your stock before the ex-dividend date, you also are selling away your right to the stock dividend. In the video, I misspoke about the Apple ex-dividend date. If you purchase the stock on or after the ex-dividend date, you will not receive the dividend.
Sell the next day when the shares go ex-dividend and receive the dividend from owning the shares for less than one business day. So if you want the dividend, you need to be an owner the day before the ex-dividend date. Those who buy simply to capture the dividend can then sell in either the premarket or during regular trading on the ex-dividend date. Selling a stock before the ex-dividend date will most certainly affect whether or not you receive a dividend from the company. David Peltier explains when you must own a dividend stock to receive a dividend payment. Some investors utilize strategies whereby they will purchase stocks just prior to an ex-dividend date and sell shortly thereafter. or "due bill" from his or her broker for the additional shares.
A trader who attempts the one-day trade to earn a dividend will break even at best. As long as the shares were settled by the record date, the dividend was earned by the investor. Thus a trader who wishes to capture the dividend could sell his stock in premarket trading on the ex-dividend date, but would expect to receive a lower price for his shares by the amount of the dividend. When you buy a stock on the ex-dividend date, it might seem as if you're losing out, but you aren't.
That being the case, an investor can buy the stock on the day prior to ex-dividend (say, for $100), sell it on the ex-dividend date (say for $99.50), and collect the $1 dividend a few weeks later, leading to a total return of $0.50 on the trade (losing $0.50 on the stock, but gaining the $1 dividend). Dividend capture attempts to buy stocks and hold them for a few days to earn the dividend.
**I meant to say I needed to invest more on May 7th (not May 8th) to get in before the ex-dividend date. I also enjoy paying attention to my dividend payout dates so I know when to expect my payouts. Instead of earning four dividends a year, dividend capture allows a trader to earn eight to 12 dividend payments per year from different stocks. On a quiet trading day the stock price of a dividend-paying corporation would typically trade at a lower price on the ex-dividend date. I love dividend investing and care about when the ex-dividend dates are fast approaching so I can get the most out of my money. Your sale includes an obligation to deliver any shares acquired as a result of the dividend to the buyer of your shares, since the seller will receive an I.O.U. Sell the next day when the shares go ex-dividend and receive the dividend from owning the shares for less than one business day.
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