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Strategies & Market Trends : Dividend investing for retirement
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To: Investor2 who wrote (26215)1/1/2017 6:56:44 PM
From: Elroy1 Recommendation

Recommended By
rnsmth

  Read Replies (1) of 34328
 
Consider this scenario concerning a series of stocks with sequential ex-dividend dates: Buy Stock A before the ex-dividend date and then sell it shortly after the ex-dividend date. Then invest the proceeds into buying Stock B before its ex-dividend date and again sell it after its ex-dividend date. Move on to Stock C...

Can this approach generate income?

All else being equal the stock share price should decline by exactly the amount of the dividend on the ex-dividend date. Of couse it goes up sometimes and goes down on other days, but on average, a stock which goes ex-dividend on a 20 cents dividend is going to decline by 20 cents on that ex-dividend date.

So your approach would generate 20 cents of dividend income (probably taxable income) and generate generate short term capital gains and losses (due to all the share trading) and lots of commissions (again due to all the trading).

It sounds like a really bad plan.

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If you want income, I would just buy CEFL and BDCL (2x leveraged basket of closed end funds and basket of BDCs) and sit on them for years. They both pay 15% to 20% annually, hard to get more than that from a dividend stock. The share price of the two moves around a lot, but they have paid really well in terms of income in the years that I've owned them.
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