September 13, 2013 Saturday
Do You Buy Stocks Just in Time for the Dividends? You’re Not Alone
Research finding :
Companies have significantly higher stock returns in months when they’re expected to issue dividends, because dividend-seeking investors buy stock in the days leading up to the expected payment!
A portfolio that bought all stocks of companies that were expected to issue dividends in a given month would earn abnormal returns of 41 basis points, the researchers say.
But beware ! Significant negative returns are seen in the 40 days after the dividend day !
Research courtesy : Samuel M. Hartzmark and David H. Solomon of the University of Southern California.
SOURCE: The dividend month premium
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