Author Topic: Trying to make sense of some dividend investing concepts.  (Read 2807 times)

sethdrebitko

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Trying to make sense of some dividend investing concepts.
« on: July 13, 2015, 12:10:46 AM »
PLEASE NOTE: I know that there are a lot of different opinions on building a dividend portfolio vs idnex funds. I'm still doing investing, but leaning towards doing both

One of the issues I am having is the many varied strategies.

One I was originally interested in involved buying stocks right before the ex-dividend date. This from what I have gathered though seems to be a pointless strategy to chaise. I was slightly inspired at the idea of trying to blend this with a traditional buy and hold dividend portfolio.

My thought was that I would create a primary set portfolio of stocks (with occasional rebalance) but have a large chunk that I shifted between these stocks. Instead of worrying about trying to constantly buy and flip for dividends at the right time, I would just need to shift the chunk at any even/favorable point between the pay date and next stocks ex-dividend date.

Again, I'm mostly working of a general idea and could be wrong here. It can be a bit tough to try and get a sense of things with many varied opinions on investment strategy.

I would appreciate any thoughts on this from some of the more experienced folks in this area!

okonumiyaki

  • Stubble
  • **
  • Posts: 179
Re: Trying to make sense of some dividend investing concepts.
« Reply #1 on: July 13, 2015, 01:04:40 AM »
There is possibly a tiny amount of arbitrage to make between people & institutions that would rather have capital gains rather than income for tax reasons

Buy the shares from them just before go ex -dividend, sell it back to them afterwards.  You pocket the dividend, but probably make a loss on selling the share, they don't get the dividend but potentially get the capital gain.  For this to make any sort of cents though you would need large volumes and very low transaction costs - i.e. to be a market maker.  The transaction costs will kill it for an individual investor


Khan

  • Pencil Stache
  • ****
  • Posts: 616
Re: Trying to make sense of some dividend investing concepts.
« Reply #2 on: July 13, 2015, 05:00:22 AM »
Quote
.  The transaction costs will kill it for an individual investor

forummm

  • Walrus Stache
  • *******
  • Posts: 7389
  • Senior Mustachian
Re: Trying to make sense of some dividend investing concepts.
« Reply #3 on: July 13, 2015, 07:19:55 AM »
Quote
.  The transaction costs will kill it for an individual investor

And you'll lose a lot with all the CG taxes unless it's in a tax-advantaged account.

There are reasons why people like Warren Buffett just buy-and-hold.

innerscorecard

  • Pencil Stache
  • ****
  • Posts: 589
    • Inner Scorecard - Where financial independence, value investing and life meet
Re: Trying to make sense of some dividend investing concepts.
« Reply #4 on: July 13, 2015, 07:58:10 AM »
Honestly, I think you should first read a basic book about investing, such as A Random Walk Down Wall Street.

Foundational knowledge is important - you will be able to think about "doing your own thing" and have it be a productive train of thought after you have at least some basic technical knowledge.
« Last Edit: July 13, 2015, 08:03:38 AM by innerscorecard »

sethdrebitko

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Trying to make sense of some dividend investing concepts.
« Reply #5 on: July 13, 2015, 08:19:04 AM »
Thanks very much for the thoughts. @innerscorecard I appreciate the suggestion and now have another book on the reading list :)

innerscorecard

  • Pencil Stache
  • ****
  • Posts: 589
    • Inner Scorecard - Where financial independence, value investing and life meet
Re: Trying to make sense of some dividend investing concepts.
« Reply #6 on: July 13, 2015, 08:27:15 AM »
Hope you like it! I don't agree with many of the conclusions anymore, but a book like that was totally invaluable for making me understand some of the basic concepts involved, such as how dividends works, why they are generally priced into market prices, and so on.

sethdrebitko

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Trying to make sense of some dividend investing concepts.
« Reply #7 on: July 13, 2015, 09:04:27 AM »
Should prove pretty useful then. Until I have a better handle on things I'm keep my money with robotraders and P2P. I'd rather have less optimized returns than loss money on some google financial advise :P

innerscorecard

  • Pencil Stache
  • ****
  • Posts: 589
    • Inner Scorecard - Where financial independence, value investing and life meet
Re: Trying to make sense of some dividend investing concepts.
« Reply #8 on: July 13, 2015, 08:38:22 PM »
Should prove pretty useful then. Until I have a better handle on things I'm keep my money with robotraders and P2P. I'd rather have less optimized returns than loss money on some google financial advise :P

There is also risk with robotraders and P2P lending. Huge risk.