Between mid-April and May, things get hot: most of the annual general meetings of publicly traded stock corporations are coming up. And it is precisely this period that can be used for bargain hunting. Because the time of the general meetings offers possibility to collect shares more favorably and thus also a chance to make fast profits in trader app. This procedure describes the so-called ex-dividend strategy.
The procedure of the ex-dividend strategy
The procedure for the ex-dividend strategy is quite simple: one observes companies with a solid business model as well as good prospects for growth and informs oneself, for example, on the website hauptversammlung.de, when the respective date for the annual general meeting is. This date is important for the ex-dividend strategy.
Then the bargain hunting can begin: One day after the Annual General Meeting is the day to go. Because that is the day after the dividend is distributed to shareholders. And it is precisely on this day that the shares of the selected company can be bought. At first glance, this action seems to be associated with a disadvantage, because the dividend payment is only due to shareholders who were in possession of the share on the day of the Annual General Meeting. Thus, one would not receive a dividend until the next year.
But this action can be connected with an advantage: Although the buyer does not get a dividend at that moment, he acquires the share at a discount, which is approximately equal in amount to the dividend. How does this work? The dividend payment causes the share price to fall in the short term. And this is precisely the time when investors can take advantage of the ex-dividend strategy. But beware: As a rule, the share price recovers quickly, so timing really is of the essence here. The share price often recovers the day after the Annual General Meeting, or at least within a week or two.
Pay particular attention to growth prospects!
Of course, the ex-dividend strategy cannot be applied blindly. You should always know exactly why you are choosing a certain company. After all, the ex-dividend strategy only works in your favor if there are good growth prospects for the company. The business model should also be able to survive in the long term in the future. Then the prospects are also good that the share will remain attractive in subsequent years and new buyers will come in. The Annual General Meeting may bring the stock to the attention of interested parties and they may buy. Demand may increase as a result, and so the share price will also rise. This moment can be used to generate profits.
Tip: Use your dividend payments wisely
If you are already the owner of various shares, you should think carefully about what to do with the dividends you receive. What initially seems like a small amount that you don't need to pay attention to could add up to a nice sum if invested intelligently. For example, anyone who owns BMW shares will receive the dividend one day after the Annual General Meeting on May 13 this year. It will flow directly into the clearing account.
Background information for you: The dividend is a portion of the profit that is distributed to shareholders. The amount of the dividend is determined by the AG's Board of Directors and then approved by a simple majority at the Annual General Meeting. The dividend is paid to the shareholders one day after the Annual General Meeting and is transferred to the relevant clearing account of the securities account. For most investors, this is exactly where the dividend remains - because it usually amounts to only a few euros per share. So depending on how many shares you own, only small amounts flow into your account with the distributions. But you should not let these go unnoticed.
It is worthwhile to think about a sensible use of this money. One possibility, for example, is to invest the money in a savings plan. Alternatively, you can invest the distributions in a fund or bank savings plan. You can determine the amount of the savings installments individually.
The most important points at a glance:
After the dividend payment, securities can usually be purchased at a lower price.
In many cases, the share price recovers quite quickly after the annual general meeting, at least in the weeks that follow.
However, the chosen stock should have good growth prospects and the company's business model must be convincing. The entry into the share should not be thought in the short term.