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American Capital Agency Corp. Message Board

  • suadela24 suadela24 Mar 11, 2013 4:20 PM Flag

    Dividend /logic

    Maybe someone can clear this up for me :

    I think of the div compared to the cap this way .

    just a example :

    I hold a thousand dollar profit in my little clenched hand from PPS increase .
    I could get a thousand dollars in div if I hold stock
    I hold the stock and the pps goes down by a thousand , net net zip
    I sell before the div and have the profit , buy back after the div
    at a lower price and still have the position plus the profit .

    im I confused ??

    Janet

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • does anyone know the div date???

      Sentiment: Buy

    • The ex date is a non event. You are in the same situation the day after as you were the day before. What you are betting on when you hold a dividend stock is that it will appreciate by the amount that it declined before the next ex date. Except for REITs the tax situation is hugely different. Sell before the ex date and buy back later and you pay income taxes. Collect the dividend and you pay dividend taxes. However REIT dividends are not treated as dividends but as income. So it makes no difference what you do other than the commissions you pay and your market timing as even on the ex date the stock price will vary for reasons other than the dividend.

    • a lot depends on what you believe will happen ex-dividend and your tax status on dividends versus cap gains.

      AGNC held in an IRA, for instance, will behave differently than AGNC held in a fully taxable account. i have done it both ways, and the difference is very real.

    • I have found that in some quarters it is clear to either hold the stock or take the capital gains and try to get in at a lower price post X. If it is not clear, my strategy has always been to sell 50% prior to the X and hold the other 50% for the div.

      One way or another you will be right with 50% of your stock. ; )

    • Janet,

      Why did you purchase the stock in the first place? Did you want to own a high dividend stock to receive the dividend? Were you hoping to capture a stock appreciation? Were you just wanting to see what it was like to own a stock and AGNC seemed to be the stock of choice? Were you wanting to just make a $1,000 in a short period (or medium period) of time? When did you purchase the shares in the first place? Your answer to these questions should have some bearing on how you approach the near future.

      GL2UA and go AGNC and MTGE

      RIM

      • 1 Reply to rimboomer
      • HI RIMBOOMER,

        I bought th stock prior to the last div and held and also added more after the SOP .
        I had the div re invested . I bought the stock originally to get the nice dividend and hoped for
        cap appreciation , which I got and it does amt to more than the div will pay now , thats why I asked
        thee question . The cap gain if I sell will be reinvested at a lower price after the div
        and I will take the profits to the mall and buy some Victoria secrete new panties , etc.

        Janet

    • Just 1 word of caution....you can't always buy it back at the lower price equal to the dividend. I have tried this strategy and many times I have seen the price open on ex-dividend at a difference less than the dividend and then over the next couple of days make back 100% of the dividend and I never had a chance to get back in.

      • 1 Reply to just_another_name
      • ....exactly suadela!!! when you jump in and out as some here call others to trade this you have higher costs, and often miss out. Try2 outsmart much smarter trading programs and traders. and the rational about you can use your capital losses to offset gains. As opposed to pay ordinary div. Rates of tax, as your income or q div. Lower. So traders here try2 lure newbies into trading away their wealth. Buy and hold anything this goode and maximize your profits.

    • You have it figured correct M'am, now its a matter of initiative. Will she make the right choice or just hold?...hmmmm;-)

      DocReits

    • Miadela. No you are not confused. Another plus, the capital gain can be offset with capital losses.
      The dividend is taxed as ordinary income.

 
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