facebookDo you think it is wise to buy stocks after ex dividend date? Would buying stocks after dividend date for blue chips stock good for long term investment since price drop after that? - Seedly
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Anonymous

15 May 2019

Do you think it is wise to buy stocks after ex dividend date? Would buying stocks after dividend date for blue chips stock good for long term investment since price drop after that?

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    What are your thoughts?

    Billy Ko

    Billy Ko

    15 May 2019

    Level 11ยทFinancial Analyst at REPE Firm

    Hi there, I would assume this is after you do your due diligence on the company you're wanting to purchase in i.e. Payout ratio, Cashflows etc.

    There are a couple of factors to consider

    1) Liquidity of stock

    If the stock is relatively illiquid, the movements in price would not be large and if trading volume is relatively low, the prices of stocks may even fall lesser than the dividend / might not even fall at all

    2) Current price

    Is the current price nearing 52 weeks high? If it is, the magnitude of fall Ex-Dividend might bring about a good chance to buy given how people would both take profit and take dividend on the Ex-Dividend date

    3) Market forces

    Now with so many external forces acting on the market, prices are a lot more volatile, hence even though theoratically it makes more sense to purchase ex-dividend, but essentially, if you're intending to hold the stock long-term, the magnitude of the dividend should be relatively minimal and if you're considering to invest, the dividend could be your first income from the stock!

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