Classic Dividend Capture Strategy

The Classic Dividend Capture strategy is pure dividend arbitrage: buy quality dividend stocks just before their ex-dividend date, collect the dividend, and sell shortly after. The goal is to maximize the number of dividends captured per year through rapid rotation.

Strategy Philosophy

Traditional dividend investing holds stocks for months or years. Classic Capture takes a different approach—treating each dividend payment as a standalone opportunity. By rotating through dozens of positions per year, the strategy aims to compound dividend income at an accelerated rate.

The key insight: quality stocks typically recover most of their ex-date price drop within a few days. By selling after recovery, you keep the dividend with minimal capital loss.

Entry Rules

• Ex-date timing: 1-3 days until ex-dividend date
• Minimum yield: Next dividend ≥ 0.4% of current price
• Quality threshold: Quality score ≥ 55
• Safety check: No high leverage flag

Exit Rules

• Time-based exit: Sell 5 days after ex-date (allowing time for price recovery)
• Quality degradation: Sell immediately if quality drops below 45

Portfolio Details

• Rebalance frequency: Daily
• Target positions: 15 holdings
• Position sizing: Equal weight
• Expected turnover: 500-700% annually

Who Is This For?

Active traders who want to maximize dividend income and are comfortable with frequent trading. This is NOT a set-and-forget strategy—it requires daily attention and generates significant transaction volume.

Risk Considerations

• Ex-date price drops may exceed the dividend amount
• Short holding periods expose capital to short-term volatility
• Tax implications: dividends may be short-term income, not qualified
• Transaction costs can erode returns (not modeled in paper portfolio)