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The Dividend Capture Strategy
A Smart Move or Fool’s Gold?
Ever heard of the “dividend capture” strategy? It’s one of those ideas that sounds almost too good to be true — like finding a $20 bill in an old coat pocket. You buy a stock right before its ex-dividend date, pocket the dividend, and then sell it shortly after, moving on to the next payout. Rinse and repeat. Free money, right?
Well, not so fast. Like most things in investing, if it seems too easy, there’s probably a catch. Let’s dig into why this strategy might look tempting, why it often falls flat, and whether it’s something you should even consider trying.
What Is Dividend Capture?
First, a quick refresher. When a company pays a dividend, there’s an ex-dividend date — the cutoff day for being eligible to receive that payout. If you own the stock before this date, you get the dividend; if you buy on or after, you don’t.
The dividend capture strategy is simple:
- Buy the stock just before the ex-date.
- Hold it long enough to qualify for the dividend.
- Sell it shortly after, ideally before the price drops too much.
In theory, you pocket the dividend and then reinvest your money elsewhere — maybe even into another stock about to…
