Understanding the Potential of Dividend Runs: A Closer Look at Progressive Corp.
This morning, a “Potential Dividend Run Alert” was issued for Progressive Corp. (NYSE: PGR) through our DividendChannel.com Dividend Alerts service, which provides free email alerts. Let’s explore what this means in detail.
What is a “Dividend Run”?
A “Dividend Run” refers to the phenomenon where a stock’s price tends to rise before its ex-dividend date. To understand this better, we need to clarify what the ex-dividend date is.
Understanding the Ex-Dividend Date
The ex-dividend date is the first trading day when new buyers do not qualify for the upcoming dividend. To receive the dividend, shares must be purchased before this date. Typically, it’s expected that the stock price will fall by the amount of the dividend at the start of trading on the ex-dividend date. For instance, if a dividend of 4.50 is expected, the stock price would drop by that amount the following day.
The Psychology Behind Dividend Runs
If a stock is likely to drop in price on its ex-dividend date, it stands to reason that it should experience upward pressure in advance of the dividend payment. Continuous declines in price would be illogical for a consistently profitable company that rewards shareholders through dividends.
Notably, dividend investors have different strategies on how to approach these runs. Some buy right before the ex-dividend date and sell afterward, while others might hold on longer or sell earlier to maximize capital gains.
Recent Performance of Progressive Corp.
Specifically, let’s examine a recent example involving the 0.1/share PGR dividend that went ex-dividend on 07/03/24. On 06/17/24, shares closed at 208.24, and by the last trading day before the ex-dividend date, they had risen to 211.12. This represents an increase of 2.88 in the final two weeks leading up to the dividend.
Capital Gains versus Dividends
Reviewing PGR’s last four dividend payments, this strategy resulted in capital gains surpassing the dividends paid three out of four times, with total gains of +11.53 compared to total dividends of 1.15. Here’s a detailed breakdown:
| Ex-Dividend Date | Price 2 Weeks Prior | Price 1 Day Prior | Run Gain/Loss | |||
|---|---|---|---|---|---|---|
| 10/03/24 | 0.1 | 09/18/24 | 257.66 | 10/02/24 | 254.43 | -3.23 |
| 07/03/24 | 0.1 | 06/17/24 | 208.24 | 07/02/24 | 211.12 | +2.88 |
| 04/03/24 | 0.1 | 03/18/24 | 206.41 | 04/02/24 | 210.03 | +3.62 |
| 01/18/24 | 0.85 | 01/02/24 | 161.63 | 01/17/24 | 169.89 | +8.26 |
| Total Dividends: | 1.15 | “Dividend Run” Total: | +11.53 | |||
Progressive Corp. is set to go ex-dividend again soon, offering a dividend of 4.50/share. Here are the important dates:
Upcoming Dividend: 4.50/share
Ex-Div Date: 01/09/25
Payment Date: 01/16/25
Dividend Frequency: Quarterly
Full PGR Dividend History »
Looking Ahead
While past performance doesn’t guarantee future results, investors interested in Dividend Runs may find PGR a stock to watch. With an annualized yield of 7.40%, it certainly warrants attention.
Stay tuned for future Dividend Run candidates, and to receive helpful email alerts, consider signing up for our free Dividend Alerts feature from DividendChannel.com.
Also see:
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
