With regards to stocks, what does the term ‘’shorting’’ mean?
I assume if I should buy a stock before its dividend pay-out date and then subsequently sell the stock after getting the dividends, that is ‘’shorting’’ correct?
Search other products or providers:
No Name
This strategy is called the dividend capture strategy whereby an investor buys a security to capture the dividend, and then sells that security to buy another security that is about to pay a dividend. By so doing, the investor can receive a steady stream of dividend income instead of waiting for an individual holding to pay its regular dividend. To effect this, Investors looking to capture a dividend must buy the security prior to the ex-dividend date to ensure they are a shareholder of record when the dividend is paid. In theory, by doing this and selling the stock after receiving the dividends, you should be able to capture numerous dividends. However, in practice this is not always the case.