(09-03-2019, 07:29 AM)Ron Ricco Wrote:(09-01-2019, 11:50 AM)stockguru Wrote: I wanted to get everyone's take on this subject. Right now when a company pays out a dividend I take the cash. I just feel it's better to reinvest those dividends I get paid out at a cheaper price. All companies normally go down the following day of payout. So i just feel I get a better and a higher dividend when I get paid out and then reinvesting them back at a better price.
My question is what do you guys prefer and why? Taking the dividend cash or reinvesting the dividends?
Thanks all
i know a stock all things being equal, will drop after the Ex dividend date by the amount of the dividend, but I have never seen it correlated to the actual pay date?
The market maker will adjust the price to account for the EX Div date prior to the open. And the way the market moves some days, you have to be paying attention to even know it happened. If you aren't paying attention you might buy a small dip that really didn't benefit you after losing the dip by a day. Theoretically the difference is stil in their come pay date. The market isn't that efficient. Other factors will guide the SP within days. Options do a better job if calculating for it. When a price looks out of place for a particular expiration date in the future, The Ex-Div date is almost shortly before the expiration.
I have some small stocks that pay a large Dividend of 8%. It's much more noticeable. They will swing like clockwork before the Ex-Div as traders try to swoop in and grab it, then leave if they can. Doesn't sound like a strategy I'd like to try but that's getting off the DRP topic.