Buy high dividend stocks just before end of quarter?

[edro]

Here is another n00b stock market question.

If a company pays dividends at the end of each quarter, why can't someone put a fortune into that stock, collects the dividends, then take their money out?

Must you hold the stock for a certain amount of time?

 

[KLin]

http://en.wikipedia.org/wiki/Dividend

 

[vi edit]

Because the day the dividend drops, the stock drops in price to reflect it.

If you bought 100 shares of something for $10 a share, and it pays a $1 dividend, the stock drops to $9 once it's paid. Your net value is still $10.

 

[TruePaige]

Originally posted by: vi edit
Because the day the dividend drops, the stock drops in price to reflect it.

If you bought 100 shares of something for $10 a share, and it pays a $1 dividend, the stock drops to $9 once it's paid. Your net value is still $10.

Exactly.

 

[FoBoT]

otherwise it would be like cold fusion

 

[andylawcc]

and isn't there a date you have to buy the stock by in order to entitle your self to the dividend?

 

[vi edit]

Originally posted by: andylawcc
and isn't there a date you have to buy the stock by in order to entitle your self to the dividend?

Yeh, the ex-dividend date.

 

[tk149]

You also have to pay taxes on the dividend, so you actually come out with less money than if you waited and bought the stock after the dividend.

 

[Specop 007]

Originally posted by: TruePaige

Originally posted by: vi edit
Because the day the dividend drops, the stock drops in price to reflect it.

If you bought 100 shares of something for $10 a share, and it pays a $1 dividend, the stock drops to $9 once it's paid. Your net value is still $10.

Exactly.

Depends what your in.