Dividend Stripping

Dividend stripping is an investment strategy where an investor buys a stock just before it pays a dividend and then sells it shortly after receiving the dividend. The goal is to collect the dividend payment while minimizing exposure to the stock’s price fluctuations. However, this strategy can be risky because stock prices often drop after the dividend is paid, potentially offsetting the value of the dividend received.

Example

An investor buys shares in a company just before the dividend record date, receives the dividend payment, and sells the shares shortly after the payment is made.