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Dividend shares - Collect or sell..?

Discussion in 'Beginner's Lounge' started by rogue1, Jan 3, 2019.

  1. rogue1


    Likes Received:
    Dec 29, 2018
    First n00by thread, here.

    I hold some dividend paying shares at the moment. Their value is increasing, but as far as I am aware it is common for such shares to increase in value in the lead up to their payout date (Feb/Aug), then plummet immediately after.

    In light of this, what are some of the things I should consider when deciding whether to sell the shares at their peak value, or hold on to the shares and collect the dividend?

    Thanks in advance for the excellent replies... :D
    Last edited: Jan 3, 2019
  2. jjbinks


    Likes Received:
    May 14, 2013
    I think it is difficult to predict the best time to sell a single stock irrespective of dividends.

    If you need to sell the shares then sell them when you need to and don't worry what happens to the price afterwards.
  3. Smurf1976


    Likes Received:
    Feb 14, 2005
    Firstly, welcome to ASF! :xyxthumbs

    As a broad concept, yes it's true that the value of shares will drop after the dividend but only by an amount roughly equal to the value of that dividend.

    So for a simple example:

    The shares are worth $10 the day before a 50 cent dividend is paid. For simplicity let's ignore franking credits and just say that the total value of that dividend is 50 cents per share.

    Most likely those shares will be worth somewhere around $9.50 each immediately after the dividend. Not exactly, there's always normal market ups and downs, but as a broad concept you haven't really lost any money.

    What company(s) are you referring to specifically? Post that and we can look at what's happened in the past as a guide assuming the company has previously paid dividends (stocks which pay dividends typically pay every 6 months or at least once every 12 months).:)

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