D

Dividend stripping

Form of tax avoidance

Nº Q5284043 ★★★★

Super Rare · Knowledge

Dividend stripping

Form of tax avoidance

Dividend stripping (also known as dividend arbitrage) is the practice of buying shares a short period before a dividend is declared, called cum-dividend, and then selling them when they go ex-dividend, when the previous owner is entitled to the dividend. On the day the company trades ex-dividend, theoretically the share price drops by the amount of the dividend.

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From Wikipedia

Dividend stripping (also known as dividend arbitrage) is the practice of buying shares a short period before a dividend is declared, called cum-dividend, and then selling them when they go ex-dividend, when the previous owner is entitled to the dividend. On the day the company trades ex-dividend, theoretically the share price drops by the amount of the dividend. This transaction may be done by an ordinary investor as an investment strategy, or used as a foundation for complex tax avoidance (such as cum-cum trading) or tax fraud (such as cum-ex trading) schemes by a company's owners or associates.

Text: Wikipédia, CC BY-SA 4.0. ·

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