Do You Buy Stocks Just in Time for the Dividends? You’re Not Alone

Companies have significantly higher stock returns in months when they’re expected to issue dividends, because dividend-seeking investors buy stock in the days leading up to the expected payment, say Samuel M. Hartzmark and David H. Solomon of the University of Southern California. A portfolio that bought all stocks of companies that were expected to issue dividends in a given month would earn abnormal returns of 41 basis points, the researchers say. But beware: Significant negative returns are seen in the 40 days after the dividend day.