Hi,
I’m after some dividends! ex-date is 6th Feb for these generous dividend payers. (So need to buy before close on 5/2/20 - for anyone wondering)
BlackRock Income & Growth Investment Trust (LSE:BRIG)
Oxford Technology 2 VCT (LSE:OXH)
Best of the Best (LSE:BOTB)
They’re paying 2.28%, 6%& 3.15% respectively if you’re interested!
Thanks
@penfoolery I’d be interested to know your logic in wanting to buy to capture a dividend. All else being equal, I would expect the stock price to drop by the value of the dividend on the day it goes ex-div. So all you achieve is a delayed small return of your own money, which may be liable to dividend tax, and a decrease in capital gains taxes when you eventually come to sell. If capital gains tax is for you at a lesser rate than dividend tax (as it is in the UK) this would not be tax efficient. Even if you pay no tax it is hard to see the advantage in buying a dividend.
@Richard.W Thanks for your reply. It’s not just for the dividend, although they are generous I want to buy the stocks to hold too. (But if I can grab a nice dividend in the process then all the better) I’ve chosen these instruments as the companies are growing well, increasing sales & profits while covering their dividend payments satisfactorily. Some companies also benefit from high levels of dividend reinvestment which helps protect the dividend dip on pay day and can even cause an opposite effect.
Basically the 6 monthly divs for these companies are generous, the companies are ones I expect to show growth (share price/EPS/profit/div) over the next 12months+ and I want to get the most out of them. Just so happens they go ex-div this week and I would prefer a dividend now + 6months growth before the next div (rather than just the growth). These choices will get me about 3% return on my investment within a month, by which time the div dip will hopefully have lifted and all is rosy. Another strategy could be to buy in the dip and forfeit the dividend this time round - however as I previously noted, the dip doesn’t always happen and the price can even lift on occasion too.
re: tax - I trade within an ISA & don’t make enough to pay CGT anyway so I don’t have to worry about it.
Hope that helps understand my thinking?
Fair enough. But I still think that on average you will do just as well if you purchase after the stock goes ex-div. If that were not the case then the market would quickly adjust to make it so. There can be no free lunch to be had through purchasing dividends, else everyone would do it.
Generally I agree with that. OXH will be paying a special dividend, then the only benefits are intermittent dividends when the VCT disposes of something. (So if I want to invest in them - & i do because I believe in their work financing UK science/technology startups - best time is now). BOTB is similar - special dividend this time round has enticed me… and I like the cars they “give” away at Gatwick airport 
@penfoolery Apologies for the delay - both BRIG & BOTB are live. We weren’t able to add OXH since it’s way too small & pretty much completely illiquid.