TOPT - Understanding Dividends

[whughes888]

I'm new to this, but when a company announces that they will be paying out dividends of $5.00 per share. Can I go wrong on buying this stock. The stock is TOPT.

With This stock, I'm also not sure of the ex-dividends date. Is it the day they announce intentions to pay out?

Thanks

[roy]

The only problem with this kinda dividend is, the stock price usually drops more than the dividend amount right after the dividend.

[stockviper]

Yep, in this case on 3/27 the stock should decrease in value by the $5.00 dividend amount. You need to own the stock by 3/22 to received the first $5.00 dividend which means you probably should buy it in the next day or 2 to ensure you "own" it as there is normally a 3 day delay from your buy date to your own date. There is another $2.50 dividend with details to be announced at the end of the month so that may keep the stock going upward in the short term.

I'll just got 75 shares of this. I like the dividend plays.

[whughes888]

Yep, in this case on 3/27 the stock should decrease in value by the $5.00 dividend amount. You need to own the stock by 3/22 to received the first $5.00 dividend which means you probably should buy it in the next day or 2 to ensure you "own" it as there is normally a 3 day delay from your buy date to your own date. There is another $2.50 dividend with details to be announced at the end of the month so that may keep the stock going upward in the short term.

I'll just got 75 shares of this. I like the dividend plays.


According to Roy in an other message, this stock should drop. I purchased 175 shares ~$3000. SHould I have shorted this stock or what whould be a good play right now since I own the stock.

Thanks- whughes888

[stockviper]

According to Roy in an other message, this stock should drop. I purchased 175 shares ~$3000. SHould I have shorted this stock or what whould be a good play right now since I own the stock.

Thanks- whughes888

NO! Don' short a stock before the dividend becuase YOU will then be responsible to pay the dividend amount.

I normally buy just a few days before the own buy date to eliminate those last few weeks of the ups and downs. Most of the time solid companies will rebound fairly quickly after paying the dividend and the price drop. You may have to hold the stock for a little while (a few months).

a few examples if you want to research...GWGO (stock dividend), FIZ, AMTD.

[whughes888]

NO! Don' short a stock before the dividend becuase YOU will then be responsible to pay the dividend amount.

I normally buy just a few days before the own buy date to eliminate those last few weeks of the ups and downs. Most of the time solid companies will rebound fairly quickly after paying the dividend and the price drop. You may have to hold the stock for a little while (a few months).

a few examples if you want to research...GWGO (stock dividend), FIZ, AMTD.
Thanks for the Info.

[madcowdisease]

Well said in the posts above. There is no such thing as free money when it comes to these divvys. The stock will drop as much or more than the dividend is worth.

As far as buying this stock for the dividend it doesn't make much sense unless you plan to hold long and expect it to increase after the divvy. You need to factor in the 15% tax on the divvy too. Let's say you get a $5 dividend. The stock goes down $5 plus the 0.75 you'll owe in taxes. So it is almost as if the stock went down $5.75.

Personally the best way to play these special divvys is to capitalize on the hype and naivity of new comers. Buy the stock as soon as you hear about it. Hopefully ppl won't know any better as far as what I wrote above. You then sell in to the demand for a quick gain before the dividend.

[whughes888]

Well said in the posts above. There is no such thing as free money when it comes to these divvys. The stock will drop as much or more than the dividend is worth.

As far as buying this stock for the dividend it doesn't make much sense unless you plan to hold long and expect it to increase after the divvy. You need to factor in the 15% tax on the divvy too. Let's say you get a $5 dividend. The stock goes down $5 plus the 0.75 you'll owe in taxes. So it is almost as if the stock went down $5.75.

Personally the best way to play these special divvys is to capitalize on the hype and naivity of new comers. Buy the stock as soon as you hear about it. Hopefully ppl won't know any better as far as what I wrote above. You then sell in to the demand for a quick gain before the dividend.

So, I should probaly get out a.s.a.p.? i'm in at 17.05

[madcowdisease]

So, I should probaly get out a.s.a.p.? i'm in at 17.05

If I remember correctly you wil see a decent jump in the price on the ex-dividend date. There is some debate as to when this is. Typically since all cash trading takes 3 days to settle the market likes to operate on this 3 day rule. Unless otherwise stated the ex-dividend date will be 3 days before the divvy shows up. If ou know the ex-dividend date i'd sell on that day. Or, if you see the stock move 3-4% in a day assume it is due to the special dividend and sell into the demand.

G'luck

[optimus25]

I've thought about dividend arbitrage, but there is no way around it. If it were that simple, everybody'd be doin it.

Hold divdend players for long term. Check out ACAS, has around an 8% divy. Just got upgraded to 5 star status by S&P Research.

[stockviper]

20% gain in 2 weeks.

Stock is around $12.50 today and may bounce with a rush of buyers. If you buy today before the rush, ride it up and get out after the 17th but before the 25th you can get the $2.50 divy but won't have to suffer the 2.50 stock price drop on the 25th. I'm in long term.

TOP Tankers Announces Date of $2.50 Per Share Special Dividend Payment;

All PRNewswire NewsATHENS, Greece, April 6 /PRNewswire-FirstCall/ -- TOP Tankers Inc TOPT announced today the declaration of a special dividend of $2.50 per share. The dividend will be payable on April 25, 2006 to shareholders of record as of April 17, 2006.

About TOP Tankers Inc

TOP Tankers Inc is an international provider of worldwide seaborne crude oil and petroleum products transportation services. The Company operates a fleet of 27 tankers, consisting of 13 double-hull Suezmax tankers and 14 double-hull Handymax tankers, with a total carrying capacity of approximately 2.6 million dwt, of which 88.8% are sister ships. Nineteen of the Company's 27 tankers are on time charter contracts with an average term of over three years with all but two of the time charters including profit sharing agreements.