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I want to be a stockholder on record for a dividend. So lets assume I bought stock before the ex dividend date. Can I immediately sell the stock after the ex-dividend date to collect the dividend, or do I need to hold for a few weeks to collect the dividend?

Lets say the ex-dividend date is the 15th of the month. I buy stock on the 14th (I think this is soon enough to be a shareholder on record) and then I sell on the 15th. Do I get the dividend in my account when it is distributed?

Don't worry – I have a proprietary way of hedging the stock's post-dividend price adjustment, and it costs less than the actual dividend so all is well.

I just don't know what the shortest time I can hold a position is. I'd like to know the shortest theoretical time possible in order to get the dividend.

Insight appreciated.

  • isn't it per stock, each company with its own rules? – littleadv Jan 12 '12 at 5:30
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    is it? I thought the announcements and the day of dividend distribution was each company's own rules, but the ex-div date is announced and then set in stone at the exchange. I imagine the length of holding period isn't an issue but that is exactly the question. – CQM Jan 12 '12 at 5:33
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    "I have a proprietary way of hedging the stock's post dividend price adjustment, and it costs less than the actual dividend so all is well." So you have a secret way to beat the system, but don't understand what ex-div really means? – JoeTaxpayer Jan 12 '12 at 6:16
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    Let us know when you make your first billion. No disrespect intended, if this were possible, it would already be out there. It's "common knowledge" that one can only get the dividend by owning it until ex-div at which point, it drops by an amount near the dividend. If in fact, you discovered something new, I wish you well. – JoeTaxpayer Jan 12 '12 at 16:58
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    I suppose one way is to buy stock prior to ex dividend date and sell a deep itm call with no time value. And hope you don't get assigned. In that case, stock drops, but short call gains, cancelling each other out, so you can close out the position at no loss/profit. And you get to keep the dividend. But yes, you need to be lucky to not get assigned. – Victor123 Mar 22 '15 at 15:27
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You only have to own it for a day (or rather for some amount of time before the close of trading the day before the ex-dividend date). This is governed by exchange rules based on the date of record and payable date set by the company. You might want to look at this article or this one for more details.

It should be difficult to make money from changes due to the dividend distribution since it is well known and expected. The exchanges have established rules for handling the various details that can come up, and traders account for the change where appropriate (as in option pricing). Also, note that the favorable U.S. tax treatment of dividends requires a 60-day ownership period for the stock.

  • can you elaborate on the "some amount of time before close of trading day", I want the absolute theoretical minimum amount of time – CQM Jan 12 '12 at 17:26
  • @CQM: I only meant that you have to take ownership before close of trading. I have no idea what happens for an after-hours trade, which is a trade outside of the exchange and not governed by its rules. – mgkrebbs Jan 12 '12 at 19:59
  • @mgkrebbs - Australia has a similar tax treatment rule for dividends, it is over 45 day when annual dividends are $5000 or over. – Victor Jul 31 '14 at 6:14

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