Trading shares or CFDs on financial markets can lead to discovering many exciting investment strategies.
Some investors are primarily interested in day trading and trying to benefit from short-term intraday price movement of shares. Others prefer to take a longer view of the markets and invest in companies that are expected to bring them steady and predictable returns through regular payment of dividends, making ownership of shares a type of rent-seeking strategy.
There are advantages and disadvantages to both approaches, and an intelligent investor will try to optimise their market portfolio in a way that is suitable and appropriate for their investment goals.
Typically, dividend investment is associated with a very long-term ownership of shares, and such investors prefer to buy and hold stock for extended periods of time in order to regularly receive dividend payments from the company. This type of approach can bring stability of a regular income, but, at the same time, opens investors to market risk, forcing them to hold assets whose price can go up and down with general market sentiment.
However, there are ways to combine tactical day trading with the longer-term strategic dividend approach into an investment method called a “dividend play”. This strategy utilises knowledge of dividend cut-off and pay-out dates to buy and sell securities in short targeted bursts.
Here at Accendo Markets, our goal is to help our clients realise their full potential on financial markets, and we are looking to examine the dividend play phenomenon in order to demonstrate how in-depth knowledge of the markets can create regular investment opportunities.