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Schwab stealth dividends — can you guess the pattern?

Monday, March 29th, 2010

Update

Schwab posted their 2010 ex-dividend / distribution dates for their no-fee ETFs here.

Original post…

Schwab’s new no-commission ETFs went ex-dividend last Monday, March 22nd.   The distribution date is 26-March–only four days later!   I had guessed Schwab would align with the quarterly iShares funds ex-dividends, but apparently they have decided to go it alone with apparently semi-random, unannounced ex-dividend dates.  The dividends to be paid were posted recently.  The distributions:

SCHA   $0.07

SCHB   $0.11

SCHG  $0.05

SCHV  $0.14

SCHX   $0.10  (I had guessed $0.12)

The two ex-dividend dates we have since the funds started, 23-Dec-09, a Thursday, and 22-Mar-10, a Monday, don’t suggest a pattern I can see.   Ex-dividend dates tend to follow a week / day of week pattern (e.g., Thursday on the 3rd week of the month), or a day of the month (e.g., 1st of the month unless it is not a business day).   The December date was the 17th business day, and the March date was the 16th, so not a usable pattern there either.  Guess we will have to wait another quarter to get another data point.   In the meantime I’m going to guess and predict the next Schwab fund ex-dividend date will be on 21-June-2010.

Posted in Dividend Capture, Mainstream, all, dividend, ex-dividend | View Comments

Where have all the sellers gone? Is fear in cash?

Wednesday, March 24th, 2010

This bull run has been going on since the 8th of February.  A very long time without a correction in these uncertain times.   In watching the market action I have been surprised at the down days.   In-spite of the late January scary correction and market shocks that I would expect to send the S&P 500 down a percent or two, the market has shown remarkable resilience.

In conversations with my friends, most of which are not active traders, I have noticed a pattern. Most of them are out of the market, expecting a double dip recessi0n.   Perhaps this is the overall situation.   Overall there are a lot of bulls remaining, but for the most part they are buy and hold types, not trying to time the market.   Are the people that are likely to get scared after a long bull run-up and sell on scary days already be on the sidelines?    If this is the case this market might have some upside left in it.

250 Days of SPY, click to enlarge

250 Days of SPY, click to enlarge

Posted in Mainstream, all | View Comments

SPY covered call using quarterly options

Tuesday, March 23rd, 2010

Bought SPY at 116.84, sold to open quarterly options, expiring 31-March at 116 strike price at 1.42,  (RDQ100331C116)  for a net debit of 115.42.

Posted in Covered Calls, Mainstream, all | View Comments

Dividend History

Monday, March 22nd, 2010

DIA dividend history

DVY dividend history

JNK dividend history – Fidelity web site

LQD dividend history – Fidelity web site

SPY dividend history

TIP dividend history

XLP dividend history – Fidelity web site

XLU dividend history

Want dividend history on another ETF/Stock?  Click this link to go to Fidelity’s web site. For starters the page will have XLU dividend history info, but you can substitute your own symbol.

Posted in Mainstream, dividend | View Comments

Equity option expiration dates –2010

Sunday, March 21st, 2010

The expiration dates for 2010 Equity options are:

January 16th, 2010
February 20th, 2010
March 20th, 2010
April 17th, 2010
May 22nd, 2010
June 19th, 2010
July 17th, 2010
August 21st, 2010
September 18th, 2010  – Next
October 16th, 2010
November 20th, 2010
December 18th, 2010
The last day of trading is the day before (Friday) the dates above.
Source:

Posted in Advanced Topics, Covered Calls, Dividend Capture, Mainstream, Options, dividend, ex-dividend | View Comments

Next SPY ex-dividend, distribution/pay dates

Sunday, March 21st, 2010

The next SPY ex-dividend date is 17-Sept-2010, I am estimating the dividend will be $0.55 per share (2009′s Sept dividend was $0.51). The distribution / pay date for that dividend is 29-Oct-2010

The last SPY ex-dividend date was 18th of June 2010.  The dividend was $0.53 ( I estimated $0.51)   The next payout / distribution date will be 30-July-2010.

See the SPDR website for the official scoop.  You must buy the ETF at least the day before to be eligible for the dividend.

SPY dividend history for the last 6 years is shown here.

Interested in SPY dividend capture?

Looking for ex-dividend information for other ETFs?   Check this page.

Posted in Dividend Capture, Mainstream, all, dividend, ex-dividend | View Comments

SPY March 2010 Dividend $0.48038

Friday, March 19th, 2010

For the next SPY ex-dividend date and estimated dividend go here.

SPDR’s 19-Mar-2010 dividend update reports SPY’s March 2010 dividend as $0.48  (I had estimated $0.52).  The pay date will be 30-April-2010.   The ex-dividend date is today, 19-March-2010.

Posted in Dividend Capture, Mainstream, all, dividend, ex-dividend | View Comments

Buy and hold v.s. market timing

Thursday, March 18th, 2010

The last few weeks have been painful for me–being on the sidelines while the market stages an impressive rally.   I don’t expect to call things right all the time, and there are worse things that just not making money for a month, but it’s not fun missing the call.

In the typical buy and hold portfolio things have a different feel.   No position is a large percentage of your total assets, assets are selected specifically so that don’t (at least theoretically) correlate with each other,  there is usually something good to say at the end of each day.  After a day like today, you might say that you have exceeded the January highs,  on a down market day you might console yourself that at least some of your money is in bonds.  But the bottom line is that you have mush.  You’ll be lucky to match the market on good years and you are still exposed to large downsides during the bad years.  In spite of a extended bull stretch SPY is just a few points where we were in late January–not exactly a stellar return so far in 2010 for buy and hold.

As it now stands, since I got out before the late January blow-off and I participated in half of this recent run-up  I’m still ahead of no-timing investing.

I still can’t commit to this market going up much in the next few weeks.  Volume has been light, there have been no recent corrections,  the economy is taking its time recovering.  If we track 2004 as we have been, we will see a correction in the next few weeks.   It seems that more patience is required.

SPY18Mar19-2004cmp

Posted in Mainstream, all | View Comments

SPY dividend capture strategies that don’t work…

Wednesday, March 17th, 2010

Some SPY dividend capture strategies I don’t recommend:

1. Sell SPY short right before closing the day before ex-dividend

  • Rationale:  Securities tend to drop by about the dividend amount when trading begins (pre-open trading)
  • Problem:   The buyer that bought the stock from you deserves the dividend and the loaner that loaned you the stock you sold (probably unknowingly), deserves the dividend too.  Two dividends, one share of stock–you make up the difference.  You will have the dividend amount subtracted from your account.

2.  Create a covered call position with SPY right before ex-dividend by buying SPY and selling  deep in the money calls

  • Rationale:  You own the stock, so you will collect the dividend.  The value of the short calls moves in direct opposition to the value of SPY, so you have a near perfect hedge, with very little risk from anything other than a total market meltdown.   The options expire the next day after the ex-dividend date so the position automatically closes itself out the weekend after the ex-dividend.
  • Problem:  If the premium value of the SPY calls is significantly lower than the dividend amount (which is a certainty with deep in the money calls near expiration) your calls will very likely  be assigned.  Your stock will be called away, and you will not collect the dividend.  Unless you received some premium when you created your covered call position (if your breakeven price is  less than the strike price)   you have just paid commissions for nothing.

3.  Buy SPY and sell the same number of IVV (the iShares version of SPY) short

  • Rationale:  Since IVV goes ex-dividend a few days after SPY there is time to buy back IVV before its dividend is due.  SPY and IVV both track the S&P index, pretty much exactly, so the long and short position are perfectly hedged.
  • Problem: The value of IVV jumps by the value of the SPY dividend on the SPY ex-dividend date.  That offset continues until IVV declares its dividend.  At that point the two ETFs go back to tracking each other with IVV typically being  ~$0.40 higher.   Your losses in your short IVV position cancel out your dividend gains from holding SPY.  Only your broker is happy.

Posted in Covered Calls, Dividend Capture, Mainstream, Options, all, dividend, ex-dividend | View Comments

SPY Dividend History

Wednesday, March 17th, 2010

SPY, said by some to be the most liquid single security in the world,  goes ex-dividend Friday, June 18th.   You must buy SPY by end of market on Thursday, the 17th to be eligible for the dividend.  I’m estimating, based on past results, that the dividend will be around $0.51  per share.

Below is SPY’s  dividend history over the last 5 years:

SPY Dividend History since 2004, click to enlarge graph

SPY Dividend History since 2004, click to enlarge graph

Posted in Dividend Capture, Mainstream, all, dividend, ex-dividend | View Comments

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