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Buying stocks in tandem with the dividends calendar
NewMoney
#1 Posted : Tuesday, June 04, 2019 7:41:00 PM
Rank: Member


Joined: 3/1/2019
Posts: 100
Location: Nairobi
So what is a good general rule of thumb on buying and selling in tandem with the dividend calendar?

I have looked at a few recent examples i.e Scangroup, KCB and Equity and the message am getting here is very clear, Kenya is a speculative country even on the stock market.

In other stock markets (according to my shallow research), shares go up after dividends are declared, and drop after book closure date, BUT, the drop is usually less than the dividend amount. However, in Kenya, the drop after book closure is usually much bigger than the dividend.

This means some players can/have devised a game where they can make much more 'dividends' by following this simple set of rules.

1) If on the date of dividends announcements you held some shares, continue to hold them for much longer but sell them before the book closure date. Then after book closure, wait for 1-3 weeks and come back and buy back your shares at a much cheaper rate.
2) Never buy more shares during the period between dividends announcement and book closure date. Wait until after closure date.

With the 'trick' above, your 'dividends' for scan group less trading costs would be a cool Kes 6.5 rather than the official 3/=, for KCB it would be at least 7/= rather than 2.5 and for Equity 4/= rather than 2/=. All estimates here are very conservative, leaning towards the worst-case scenario.

This trick also works better than day trading since it is simple, just buy slowly any solid share in the safe window (after book closure and before dividends declaration), sell after dividends declaration before book closure, continue buying again after book closure.

Question is have you guys heard of anything like this, is this legal, how prevalent is it, am I going to be a billionaire by just using this??


NB: 1) by dividend announcement I mean when the full dividends calendar is announced including the book closure date (e.g Safaricom dividends have been announced but the closure date is not yet announced so it is safe to buy now)

2) I am not a stocks expert by any means, follow my posts and comments at your own risk

NewMoney
#2 Posted : Wednesday, June 05, 2019 4:43:58 AM
Rank: Member


Joined: 3/1/2019
Posts: 100
Location: Nairobi
NewMoney wrote:
So what is a good general rule of thumb on buying and selling in tandem with the dividend calendar?

I have looked at a few recent examples i.e Scangroup, KCB and Equity and the message am getting here is very clear, Kenya is a speculative country even on the stock market.

In other stock markets (according to my shallow research), shares go up after dividends are declared, and drop after book closure date, BUT, the drop is usually less than the dividend amount. However, in Kenya, the drop after book closure is usually much bigger than the dividend.

This means some players can/have devised a game where they can make much more 'dividends' by following this simple set of rules.

1) If on the date of dividends announcements you held some shares, continue to hold them for much longer but sell them before the book closure date. Then after book closure, wait for 1-3 weeks and come back and buy back your shares at a much cheaper rate.
2) Never buy more shares during the period between dividends announcement and book closure date. Wait until after closure date.

With the 'trick' above, your 'dividends' for scan group less trading costs would be a cool Kes 6.5 rather than the official 3/=, for KCB it would be at least 7/= rather than 2.5 and for Equity 4/= rather than 2/=. All estimates here are very conservative, leaning towards the worst-case scenario.

This trick also works better than day trading since it is simple, just buy slowly any solid share in the safe window (after book closure and before dividends declaration), sell after dividends declaration before book closure, continue buying again after book closure.

Question is have you guys heard of anything like this, is this legal, how prevalent is it, am I going to be a billionaire by just using this??


NB: 1) by dividend announcement I mean when the full dividends calendar is announced including the book closure date (e.g Safaricom dividends have been announced but the closure date is not yet announced so it is safe to buy now)

2) I am not a stocks expert by any means, follow my posts and comments at your own risk




Alrighty no comments so far. I will answer this questions myself. This method will not work if applied by the majority since it will create too much supply after dividends announcement hence no price hike and too much demand after book closure hence a huge price hike, hence those who keep their shares and wait for the dividends will win.

DEFINITELY it is not illegal since the market can easily adapt to it. Either way, more people Kenya need to learn this and practice it as a counterbalance to the current situation.

Happy trading
Monk
#3 Posted : Wednesday, June 05, 2019 7:35:29 AM
Rank: Member


Joined: 7/1/2009
Posts: 106
NewMoney wrote:
NewMoney wrote:
So what is a good general rule of thumb on buying and selling in tandem with the dividend calendar?

I have looked at a few recent examples i.e Scangroup, KCB and Equity and the message am getting here is very clear, Kenya is a speculative country even on the stock market.

In other stock markets (according to my shallow research), shares go up after dividends are declared, and drop after book closure date, BUT, the drop is usually less than the dividend amount. However, in Kenya, the drop after book closure is usually much bigger than the dividend.

This means some players can/have devised a game where they can make much more 'dividends' by following this simple set of rules.

1) If on the date of dividends announcements you held some shares, continue to hold them for much longer but sell them before the book closure date. Then after book closure, wait for 1-3 weeks and come back and buy back your shares at a much cheaper rate.
2) Never buy more shares during the period between dividends announcement and book closure date. Wait until after closure date.

With the 'trick' above, your 'dividends' for scan group less trading costs would be a cool Kes 6.5 rather than the official 3/=, for KCB it would be at least 7/= rather than 2.5 and for Equity 4/= rather than 2/=. All estimates here are very conservative, leaning towards the worst-case scenario.

This trick also works better than day trading since it is simple, just buy slowly any solid share in the safe window (after book closure and before dividends declaration), sell after dividends declaration before book closure, continue buying again after book closure.

Question is have you guys heard of anything like this, is this legal, how prevalent is it, am I going to be a billionaire by just using this??


NB: 1) by dividend announcement I mean when the full dividends calendar is announced including the book closure date (e.g Safaricom dividends have been announced but the closure date is not yet announced so it is safe to buy now)

2) I am not a stocks expert by any means, follow my posts and comments at your own risk




Alrighty no comments so far. I will answer this questions myself. This method will not work if applied by the majority since it will create too much supply after dividends announcement hence no price hike and too much demand after book closure hence a huge price hike, hence those who keep their shares and wait for the dividends will win.

DEFINITELY it is not illegal since the market can easily adapt to it. Either way, more people Kenya need to learn this and practice it as a counterbalance to the current situation.

Happy trading


The trend you describe doesn't play out on all counters every time. You also forgot to account for broker commissions. I prefer to wait for the dividends, and reinvest them if there is a dip ex-div.
NewMoney
#4 Posted : Wednesday, June 05, 2019 7:58:05 AM
Rank: Member


Joined: 3/1/2019
Posts: 100
Location: Nairobi
Monk wrote:
NewMoney wrote:
NewMoney wrote:
So what is a good general rule of thumb on buying and selling in tandem with the dividend calendar?

I have looked at a few recent examples i.e Scangroup, KCB and Equity and the message am getting here is very clear, Kenya is a speculative country even on the stock market.

In other stock markets (according to my shallow research), shares go up after dividends are declared, and drop after book closure date, BUT, the drop is usually less than the dividend amount. However, in Kenya, the drop after book closure is usually much bigger than the dividend.

This means some players can/have devised a game where they can make much more 'dividends' by following this simple set of rules.

1) If on the date of dividends announcements you held some shares, continue to hold them for much longer but sell them before the book closure date. Then after book closure, wait for 1-3 weeks and come back and buy back your shares at a much cheaper rate.
2) Never buy more shares during the period between dividends announcement and book closure date. Wait until after closure date.

With the 'trick' above, your 'dividends' for scan group less trading costs would be a cool Kes 6.5 rather than the official 3/=, for KCB it would be at least 7/= rather than 2.5 and for Equity 4/= rather than 2/=. All estimates here are very conservative, leaning towards the worst-case scenario.

This trick also works better than day trading since it is simple, just buy slowly any solid share in the safe window (after book closure and before dividends declaration), sell after dividends declaration before book closure, continue buying again after book closure.

Question is have you guys heard of anything like this, is this legal, how prevalent is it, am I going to be a billionaire by just using this??


NB: 1) by dividend announcement I mean when the full dividends calendar is announced including the book closure date (e.g Safaricom dividends have been announced but the closure date is not yet announced so it is safe to buy now)

2) I am not a stocks expert by any means, follow my posts and comments at your own risk




Alrighty no comments so far. I will answer this questions myself. This method will not work if applied by the majority since it will create too much supply after dividends announcement hence no price hike and too much demand after book closure hence a huge price hike, hence those who keep their shares and wait for the dividends will win.

DEFINITELY it is not illegal since the market can easily adapt to it. Either way, more people Kenya need to learn this and practice it as a counterbalance to the current situation.

Happy trading


The trend you describe doesn't play out on all counters every time. You also forgot to account for broker commissions. I prefer to wait for the dividends, and reinvest them if there is a dip ex-div.


In the 3 examples above am actually accounting for a 3.5% commission for buy and sell. (1.75% each way assuming you are trading over 100k). I will play it out with safcom to see if it works The target will be to pocket 5/= per share and still retain the same number of shares.
sparkly
#5 Posted : Wednesday, June 05, 2019 10:09:39 AM
Rank: Elder


Joined: 9/23/2009
Posts: 7,292
Location: Enk are Nyirobi
NewMoney wrote:
Monk wrote:
NewMoney wrote:
NewMoney wrote:
So what is a good general rule of thumb on buying and selling in tandem with the dividend calendar?

I have looked at a few recent examples i.e Scangroup, KCB and Equity and the message am getting here is very clear, Kenya is a speculative country even on the stock market.

In other stock markets (according to my shallow research), shares go up after dividends are declared, and drop after book closure date, BUT, the drop is usually less than the dividend amount. However, in Kenya, the drop after book closure is usually much bigger than the dividend.

This means some players can/have devised a game where they can make much more 'dividends' by following this simple set of rules.

1) If on the date of dividends announcements you held some shares, continue to hold them for much longer but sell them before the book closure date. Then after book closure, wait for 1-3 weeks and come back and buy back your shares at a much cheaper rate.
2) Never buy more shares during the period between dividends announcement and book closure date. Wait until after closure date.

With the 'trick' above, your 'dividends' for scan group less trading costs would be a cool Kes 6.5 rather than the official 3/=, for KCB it would be at least 7/= rather than 2.5 and for Equity 4/= rather than 2/=. All estimates here are very conservative, leaning towards the worst-case scenario.

This trick also works better than day trading since it is simple, just buy slowly any solid share in the safe window (after book closure and before dividends declaration), sell after dividends declaration before book closure, continue buying again after book closure.

Question is have you guys heard of anything like this, is this legal, how prevalent is it, am I going to be a billionaire by just using this??


NB: 1) by dividend announcement I mean when the full dividends calendar is announced including the book closure date (e.g Safaricom dividends have been announced but the closure date is not yet announced so it is safe to buy now)

2) I am not a stocks expert by any means, follow my posts and comments at your own risk




Alrighty no comments so far. I will answer this questions myself. This method will not work if applied by the majority since it will create too much supply after dividends announcement hence no price hike and too much demand after book closure hence a huge price hike, hence those who keep their shares and wait for the dividends will win.

DEFINITELY it is not illegal since the market can easily adapt to it. Either way, more people Kenya need to learn this and practice it as a counterbalance to the current situation.

Happy trading


The trend you describe doesn't play out on all counters every time. You also forgot to account for broker commissions. I prefer to wait for the dividends, and reinvest them if there is a dip ex-div.


In the 3 examples above am actually accounting for a 3.5% commission for buy and sell. (1.75% each way assuming you are trading over 100k). I will play it out with safcom to see if it works The target will be to pocket 5/= per share and still retain the same number of shares.


This may work in a bearish (downward trending market) but if the market turns bullish (upwards trending), you will be left with brokerage commission, zero dividend and opportunity lost for capital gains.

Better take the cash dividend and re-invest in the share.
Life is short. Live passionately.
Mucher
#6 Posted : Sunday, June 16, 2019 7:07:10 PM
Rank: New-farer


Joined: 1/15/2019
Posts: 33
There is certainly possibility of market dip after dividend payouts. However, nobody can be sure in advance how high that dip would be. Another issue to watch are also brokerage fees, as they should be accounted when calculating profitability of one deal
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