Dividend Capture

Bond or stock dividends are interesting because they are market discontinuities. Unlike surprising earnings reports, revised analyst ratings, or lawsuits dividends are usually predictable in both amount and timing. You can capture a dividend by just buying and holding onto a investment that offers them, but then you are exposed to the price movements of that instrument.

Stock prices obviously move with the market, but bond prices move too, sometimes dramatically with changes in interest rates. I’m interested in how I can qualify for a dividend payout while minimizing my exposure to the price of the instrument. I’ll gladly give up the upside of any price movements if I can avoid the downside too.

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