Thx to whomever if was a few pages back who noted the VZ dividend. I dipped in at COB on 1/8, bought 5000 shares, and just sold today at .35 cents or so over purchase price. Should get a nice dividend check in early Feb. Easy $!
Honest question - can you help me understand the strategy here, I struggle with the dividend "farming" idea.
I worked up a quick spreadsheet, and based on closing price on 1/8 of VZ and your statement that you sold for $.35 over, I calculated you made approx $5090. If you had put the same money in the S&P on the close on 1/8 and sold at the close today, you would have made $5,600, so an extra $510. And in my understanding in both cases it's all ordinary income as your dividends aren't qualified and the gains are short term.
Neither one is guaranteed, of course. VZ had to overcome the $.6775 drop in share price at ex-d date, which in this case it did. But if the market was going down, both it and the SPY would have likely gone down, even if by different percentage amounts.
It just seems there's this idea that there is a "free lunch" with this strategy but I keep hearing there isn't, and I'm trying to wrap my head around it.