Wednesday, May 9, 2012

Buy or Sell in May - even with dividends coming in!!

The month of May for over the years has generally been a month of "thoughts" for most people.

For myself at least, I have a lot of stocks that I own going ex-dividend at the month of May and (don't misunderstood me) yes indeed very happy I am. However, as many would have already known, the month of May has traditionally been a month of "sell" and many of the index would fall quite sharply at times, causing individual stocks to fall as a result. Because of this incident, it made me think whether it is beneficial for shareholders to take their dividends in May when the stock would instead go lower after they have gone ex-dividend.


For example, my ST Engineering was reaching $3.30 a day before it goes ex-dividend. The dividend given out was $0.125. However, (traditionally as well), the stock would fall to near $3 everytime it goes ex-dividend during this period, which has led me thinking whether it is worthwhile to take the dividend when it goes much lower than the dividend given (almost two times!!).

The same incident goes for Plife Reit for example today. The stock reached a high 1.91 a day before it goes ex-dividend and then slump to 1.80 the day it goes xd. The dividend given is only 0.025 but the shares goes down almost 4 times the amount of the dividend.

Could this be because of the Europe crisis going on or generally the case for so usually? Would selling the stock a day before it goes ex-dividend more worthwhile in the long run than taking the dividend itself?

Appreciate if anyone has experience on this.

2 comments:

  1. Hi "B"

    It is pretty hard to time the market, what if the market price go up after the XD? (usually this is the not case..lol)...

    Regards,
    Gregg

    ReplyDelete
  2. Not so easy to time the market; otherwise I would have bought back many of my stocks that were sold.

    ReplyDelete

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