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How does the timing of dividend payments influence buy/sell decisions for the income investor?

How does one time purchases and sales of stocks relative to the payment of dividends?
I believe that one has to own a stock for some fixed period of time in order to have earned the next quarterly dividend. What rules are in place here? Thanks.

Generally speaking, the price of the stock drops at least as much as the divi payout on or near the date of payout. This isn’t mandatory or mechanical…it just seems to happen. This usually prevents people from trying to buy a stock just before the cutoff date and selling right after they get the dividend payout.

Hope it helps.
-Mike

This entry was posted on Tuesday, July 26th, 2011 at 2:03 pm and is filed under dividend. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “How does the timing of dividend payments influence buy/sell decisions for the income investor?”

  1. Jamlord says:
    July 26, 2011 at 7:52 pm

    Not much. Any dividends comes out of the price of that stock.
    References :

  2. Mike Cichocki says:
    July 26, 2011 at 8:25 pm

    Generally speaking, the price of the stock drops at least as much as the divi payout on or near the date of payout. This isn’t mandatory or mechanical…it just seems to happen. This usually prevents people from trying to buy a stock just before the cutoff date and selling right after they get the dividend payout.

    Hope it helps.
    -Mike
    References :
    5 years financial market experience. http://www.tradersbase.com

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