Jefferies Group’s Upcoming Dividend Sparks Interest in “Dividend Run”

This morning, a “Potential Dividend Run Alert” was issued for Jefferies Group Inc. (NYSE: JEF) through our Dividend Alerts service. Let’s delve into the details surrounding this alert.

Understanding the Dividend Run Concept

So, what exactly is a “Dividend Run”? This intriguing concept was first discussed at a ValueForum conference. To clarify it, we must start with the behavior of a stock on its ex-dividend date.

The ex-dividend date marks the trading day when any buyer of the stock no longer qualifies for the upcoming dividend. In simpler terms, to receive the dividend, one must purchase the stock before the ex-dividend date.

Usually, the stock price is expected to drop by the dividend amount on the ex-date. This is logical because if a buyer is entitled to a $0.40 dividend before the ex-date and not entitled after, the decrease makes sense. Without this decline, a buyer would effectively pay $0.40 more for the same stock.

Anticipating a Dividend Spike

Now, if a stock is expected to decline by the dividend amount on its ex-date, it stands to reason that it will rise ahead of a dividend. If a dividend-paying stock only fell without ever rising, it could eventually reach zero, which wouldn’t reflect a company that continually profits and pays dividends. Consequently, there should be an innate “pressure” for the stock to increase in value anticipating the next cash dividend—this gives rise to the concept of a potential Dividend Run.

The term “sometime” is key here. Different dividend investors have various opinions on the ideal timeframe for capturing Dividend Run effects. Some investors prefer to buy and sell based on specific target dates, while others use dollar-cost averaging strategies. Some opt to buy shortly before the ex-dividend date, hold for the dividend, and sell afterward to capture income. Conversely, others might sell the day before the ex-date, aiming to maximize capital gains. A common strategy involves buying approximately two weeks before the intended sale date.

Recent Performance of Jefferies Group

For instance, Jefferies Group’s $0.35 dividend went ex-dividend on November 18, 2024. On the preceding trading day, the shares closed at $74.20, and two weeks before that, on November 1, 2024, they closed at $64.22. Consequently, in the final two weeks leading up to the dividend, JEF gained $9.98 in price.

Dividend History and Gains

Reviewing Jefferies Group’s last four dividends, this strategy captured capital gains exceeding the dividends three out of four times, with a total of $10.43 in capital gains. This amount surpasses the total dividend payments of $1.40 from the same period. The data is summarized below:

Ex-Dividend		——Price 2 Weeks Prior—»		——Price 1 Day Prior—»		Run Gain/Loss
02/14/25	0.4	01/30/25	77.14	02/13/25	70.90	-6.24
11/18/24	0.35	11/01/24	64.22	11/15/24	74.20	+9.98
08/19/24	0.35	08/02/24	54.22	08/16/24	57.54	+3.32
05/17/24	0.3	05/02/24	43.91	05/16/24	47.28	+3.37
Div Total:	1.40	“Divvy Run” Total:				+10.43

Looking Ahead

In approximately two weeks, Jefferies Group Inc. (NYSE: JEF) will go ex-dividend for its latest dividend of $0.40 per share. Will the historical pattern of a Dividend Run repeat itself?

Upcoming Dividend: $0.40/share
Ex-Div Date: 05/19/25
Payment Date: 05/29/25
Dividend Frequency: Quarterly
Full JEF Dividend History: Available on request.

Although past performance cannot guarantee future returns, for investors who utilize Dividend Runs as one of their strategies, JEF is a noteworthy stock with an implied annual yield of 3.25%.

Additional Insights:

• Stocks Where Yields Got More Juicy
• ETFs Holding MFSF
• Funds Holding FGRO

The views and opinions expressed herein are those of the author and do not reflect those of Nasdaq, Inc.