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Strategies
The ideal dividend strip is to pick
up the dividend, the imputation credit and a capital gain in the short term,
say 3 or 4 weeks round trip. However,
it can be a balancing act, so therefore a
time commitment is required to monitor the situation constantly, and a
considerable amount of time is spent researching.........hence the exdividendwatchlist.
We commenced the above portfolio as
at 1st July 2004 with $75000.
The result is after adding back dividends received, less interest
accrued on the margin loan &
brokerage/gst.
The transactions to support the Equity Chart can be
found at Trading
Diary 1, Trading
Diary 2 & Margin
Trading 1 Margin
Trading 2
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When a
stock goes exdividend, it usually, but not always, drops approximately the
dividend amount plus sometimes the franking credit. On some occasions the dividend and franking credit can be
recovered in a day or two, other times it could take weeks or even
months. If you need the capital for
another purchase, it is usually better to sell the slow movers to speed up
the strategy. I
realised many years ago that trading stocks cumdividend time gives stocks a
reason to rise.......at least a reason to be on my watchlist. My charts then tell me whether the stock
is in uptrend or downtrend........whether or not you stay in for the dividend
is your decision. The exdividend watchlist is applicable to
the ASX. (Australian Stock Exchange) My exdividend watchlist is beside me on the desk all the
time.......it works for me. Checkout my sample exdividend watchlist then click on 1
MONTH FREE TRIAL When trading for dividends, it is
important to be aware of the 45 day holding period rule. See… www.ato.gov.au/individuals/content.asp?doc=/content/42807.htm&page=10 If you
are trading under 45 days and want more dividends & still retain the
franking credits, you will need to look at some zero and partially franked
stocks. It is
also important not to become carried away with the prize of the dividend, as
the stock could tumble for some time after exdividend date, so your normal
trading stoploss rules must apply. As
I said earlier the exdividend
watchlist is only a tool for a strategy and last minute culling must be
done before exdividend date to decide which stocks are to be sold immediately
or to hold for the dividend. Traders
like me want to leverage trades with margin lending, so you will see on the
example watchlist additional columns showing returns that the dividend plus
the franking credit would achieve on equity invested. Be aware of when stocks go
exdividend, and plan ahead for it, because you could blow out your margin
lending ratios and that would require you to sell off a few stocks at an
inconvenient time of the price cycle or put up extra cash. Good Trading Don Waterfield sales@exdividendwatchlist.com.au
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