Stock Question

[ivshawk]

Anyone have any insight into buying stocks that are going to pay a special dividend.? Is it a good time to invest before a special dividend is paid, bad time, neutral?

 

[Mountain Man Hawk]

Neutral. That information will be taken into account in the stock price. Of course, if you knew the company was going to announce the special dividend before the rest of the market was able to price that in, you would do great. Insider trading rules prevent that though.
Posted from Rivals Mobile

 

[dgordo]

Yep, in theory as soon as a dividend is declared the stock price should decrease by the amount of the dividend.
Posted from Rivals Mobile

 

[Pepperman]

Not so much replying to dgordo (he knows markets as well as I do) but would say this in addition to what he said:

Yes, although if a company is not known to be shareholder-friendly, it will be a lot more of a boost to the market's value when/if a special dividend is declared.

I will offer Japan as the current example (Fanuc huge announcement last week).

 

[dgordo]

Good point, markets aren't always efficient because investors don't always behave rationally.
Posted from Rivals Mobile

 

[hawkitd]

OP: also consider the tax implications. A large special payment could bump you into a higher tax bracket or put you above certain income thresholds (IRA contributions, etc)