This may be a silly question, but I'm a little confused. Here's my situation: My company has started originating mortgages for a publicly traded real estate trust. As part of our compensation we elected to take stock in the company. They offer a pretty good deal and it only equates to a small percentage of our commission. This stock pays an attractive dividend @ almost 12% and tax free as it's a real estate trust. So our objective with the trading account was to just sit on it and collect the dividends. It also makes for a great way to allocate unneeded funds at the end of the year to avoid taxation. So while this is a decent plan, the stock moves very very slowly so there is little fear of loss, I have noticed that daily price swings occur very regularly. I'd like to take advantage of these swings with some short term moves. I'll only be making nickles here and there, but it's still more than dividends alone. So here's the question, how long do we need to own the stock to get paid the dividends? Would day or swing trading this account negate our dividends? Should I just be writing and buying options with the hope of either collecting premiums or acquiring more stock at a better price? Thanks for any help you can offer
the dividends are paid on a specific interval. usually monthly or quarterly. check here: http://www.fulldisclosure.com/highlight.asp?client=cb you have to own the stock the day it trades x dividend. you don't have to own it at any other time to qualify for the dividend. i think the best way to gain income on it would be to do covered calls on it.
Thanks, So what day do we need to own the stock, the declaration date? Any ideas on the best way to write covered calls. Thanks
It is the day before the Ex-dividend date. For example, if the ex-dividend date is 8/23 then you need to buy the stock no later than 8/22 in order to be entitled to a dividend.