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That's not how dividends work.
by baking 2y ago
That's not how dividends work.
- robszumski 2y agoYou have to hold the fund on the ex-dividend date... Pays out once in Dec. If you buy in Feb and sell in Oct, you're not getting your dividend although you earned most of it... If you had VTI, you'd get 3 of them.
- baking 2y agoDividends are built into the NAV price. It just becomes taxable income when it is paid out.
- robszumski 2y agoAh right
- TeaBrain 2y agoI'd also thought your idea sounded like it made sense, sort of like how a trader can attempt dividend stripping, but looks like the user baking cleared that up.
- TeaBrain 2y agoThey raise a good point, which I've never considered before. This could be considered a form of dividend arbitrage based on the difference in scheduling between the component dividends vs the fund dividends, based on the knowledge that a non-zero amount of fund holders will exit the fund before the once a year dividend date, but not before the fund earned dividends based on the fund components.
- TeaBrain 2y agoNevermind, it looks like baking cleared up my misconception in another reply.