What is a dividend capture strategy?
The dividend capture strategy is an income-focused stock trading strategy popular with day traders. Basically, an investor purchases shares of the stock before the ex-dividend date and sells the shares on the ex-dividend date or any time thereafter. If the share price does fall after the dividend announcement, the investor may wait until the price bounces back to its original value. Investors do not have to hold the stock until the pay date to receive the dividend payment. Generally, this is an active trading strategy that requires frequent buying and selling of shares, holding them for only a short period of time long enough to capture the dividend the stock pays.