Buying the Dividend

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mjdaniel
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Buying the Dividend

Post by mjdaniel » Mon Jun 13, 2016 5:17 pm

I have some friends that have just rolled over their 401K's to Vanguard and they are interested in the Wellesley Income Fund. I read where the declaration date is 6/15 and we are wondering if they should go in tomorrow or wait till after the dividend. I have read where buying the dividend is a bad thing, but I think it is bad where you get in for the dividend then sell and move to something else. Their intention is to get in and stay in. Should they get in tomorrow to benefit?

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cheese_breath
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Re: Buying the Dividend

Post by cheese_breath » Mon Jun 13, 2016 5:27 pm

If they're rolling their 401Ks into IRAs it doesn't matter. Buying the dividend is only a concern in taxable accounts.
The surest way to know the future is when it becomes the past.

mjdaniel
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Re: Buying the Dividend

Post by mjdaniel » Mon Jun 13, 2016 5:29 pm

Cheesebreath, thanks. This question was also to show them how to go to the forum and get assistance.

mjdaniel
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Re: Buying the Dividend

Post by mjdaniel » Mon Jun 13, 2016 6:08 pm

I do have a follow on question. It sounds like it is to their advantage to get in before the declaration date so they get the dividend reinvested before the nav drop after the dividend is paid correct? In other words, if they bought in after the declaration date and before the dividend was paid, then they would lose.

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CABob
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Re: Buying the Dividend

Post by CABob » Mon Jun 13, 2016 6:40 pm

mjdaniel wrote:I do have a follow on question.
Read cheese's earlier response again. For a 401k to IRA rollover it doesn't matter.
Bob

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ogd
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Re: Buying the Dividend

Post by ogd » Mon Jun 13, 2016 6:42 pm

mjdaniel wrote:I do have a follow on question. It sounds like it is to their advantage to get in before the declaration date so they get the dividend reinvested before the nav drop after the dividend is paid correct? In other words, if they bought in after the declaration date and before the dividend was paid, then they would lose.
Nope. You never win or lose anything by these maneuvers, except time in the market, and taxes when applicable.

(Besides, it would be to their advantage to reinvest the fixed $ dividend at the lower NAV, not their disadvantage. This is what happens -- you get the lower NAV).

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