Dividend Capture

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DEFINITION of 'Dividend Capture'

A timing-oriented investment strategy revolving around the purchase and sale of dividend-paying stocks. Dividend capture is specifically the practice of buying a stock just prior to the ex-dividend date in order to capture the dividend, then selling it after the dividend is paid. The purpose of the two trades is simply to receive the dividend, as opposed to selling at a profit.

BREAKING DOWN 'Dividend Capture'

Many corporations engage in divided capture trading because of the limited amount of tax that they must pay on the dividend income of other corporations. Dividend capture is synonymous with trading dividends. It should be noted that many financial planners frown on this strategy for individual clients; the amount of time, research and trading commissions necessary to do it successfully often offsets any profits received.

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RELATED FAQS
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    Learn how to implement the dividend capture strategy, an aggressive, income-focused stock trading strategy investors can ... Read Answer >>
  2. Where can I find the past record dates for a company's cash or stock dividend?

    Learn more about dividend record dates and how they are used to determine the recipient of dividends. Find out how to locate ... Read Answer >>
  3. What is the difference between yield and dividend?

    Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ... Read Answer >>
  4. In what situations must taxes be paid on a stock dividend?

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  5. Is it a good idea for a beginning investor to arbitrage the dividend calendar?

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