Loaded dice to sell before Ex Div.28 Aug 2024 12:41
Like many, I am a Long term holder here, with c4,200 shares held in an ISA at an average of £18.
Have sold and bought back with some degree of success over the past year, but not as well as others claim.
I might be slow off the mark, but in a way, I am not surprised that this share drops before ex Div date, as there is better chance of success in the Sell and Buy Back routine, compared to conventional FTSE 100 stocks.
Often, when a share approaches Ex Div, the price rises, as traders acquire, to make a turn on collecting the divi. There is then a perennial debate on LSE board as to whether a share will fall by more than the dividend, (and the costs of re-purchase), to make the sell and buy back worth while.
For some, who hold shares outside of an ISA wrap, there are then also the tax considerations, as some prefer to forego a dividend to avoid the tax, to then post the hoped-for Capital gain, made on the turn, to their (Shrinking) annual Capital Gain personal allowance.
For me, this is the one share where playing this game is loaded in the UK investors favour. - 2 reasons for this...
1) Everything else being equal, payment of the dividend is going to take c23p off the share price tomorrow. I will only see c16p of this, due to the 30% withheld by the US tax authorities.
2) There is no UK stamp duty to pay on buying DEC shares, and so the cost of sell and re-purchase after Ex-Div day is just the brokers dealing costs, (which in my case with Barclays is £12).
So, looking at my holding of approx 4,200 shares, there is an opportunity to profit (4,200 x £0.07) - £12 = £282.
Obviously using an alternative broker that would refund me 15% of the 30% withheld would make this arguement less compelling, but the logic still holds....
So that could be why there is not the customary buying spree just ahead of a share going Ex-Div.
FG
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