Dividend Rollover Plan

An investment strategy in which a pidend-paying stock is purchased right before the ex-pidend date, which gives the purchaser the right to the pided, with the position being sold off shortly after the ex-pidend date. The sole intention of this practice is to reap the value of the pidends while breaking even on the shares. Ideally, this strategy is designed to maximize short-term return on shares while minimizing risk.

Also known as a "pidend capture strategy".

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Taobiz explains Dividend Rollover Plan

For example, suppose that XYZ Corp. announces that it will distribute a pidend of $2/share and that the ex-pidend date will be on March 16. Joe can attempt a pidend rollover plan by buying the XYZ Corp. stock on March 15 (or any other day before the March 16) and then selling the shares on March 16 to regain most of the purchase value of the shares. Ideally Joe should profit by $2/share (the pidend's value).

Proponents of pidend rollover planning argue that immediate returns on investments are made while reducing risk. However, opponents of the strategy believe that the expected pidend value is already incorporated into the stock before the ex-pidend date because the market anticipates the pidend payout.