Wouldn it be profitable to buy a stock when a dividend is declared and sell it the day the stock goes ex?
Sounds great but this idea just doesn’t work. On the day a stock goes ex, the price is readjusted to account for the dividend. So you’d end up even, no gain at all, just transaction charges. Here’s an example: Stock X declares a dividend of a dollar per share. You rush out and buy the stock at $30 a share. You hold stock until the dividend is paid. On the day the stock goes ex, the opening price of the stock is no longer $30. It opens at $29, automatically readjusted to reflect that $1 dividend. You end up exactly where you started.
