Everest Group’s Dividend Run: Strategies to Capture Gains
This morning, a “Potential Dividend Run Alert” was issued for Everest Group Ltd (NYSE: EG) through our DividendChannel.com Dividend Alerts service, a complimentary email alert feature. Let’s dive deeper into what this means.
Understanding the Dividend Run Concept
First, let’s clarify what a “Dividend Run” is. This concept was introduced to us at a previous ValueForum conference. To grasp it fully, we need to understand stock behavior on its ex-dividend date.
The ex-dividend date is the trading day after which new buyers of the stock no longer qualify for the upcoming dividend. To receive the dividend, shares must be bought before this date. Typically, a stock’s price is expected to decrease by the dividend amount on the ex-dividend date. For instance, if a stock offers a $2.00 dividend, its price should drop by that amount the following trading day. This logic follows the principle that if it didn’t drop, new buyers would effectively be overpaying.
The Rising Anticipation of Dividends
Now consider this: if investors anticipate the stock price to fall on the ex-dividend date, shouldn’t it naturally rise beforehand? If a stock only drops on each ex-date, its value would eventually reach zero, which seems illogical for a company that consistently earns profits and pays dividends. Investors should expect some level of price increase prior to a dividend being paid, creating a “Dividend Run.”
The timing of these Dividend Run effects varies among investors. Some prefer specific target dates for buying and selling, while others use dollar-cost averaging. Many choose to buy shares close to the ex-dividend date, hold them through the dividend, and then sell shortly after, ensuring they collect the payment. Others may opt to sell just before the ex-date to maximize capital gains. An example timeframe discussed involves buying shares around two weeks (or ten trading days) before selling on the ex-dividend date.
Examining Everest Group’s Dividend History
For instance, take the $2.00 dividend from EG that went ex-dividend on 05/29/24. The closing price the day before — the last opportunity for sellers to benefit from that dividend — was $388.46. Two weeks earlier, on 05/13/24, shares closed at $381.18, reflecting a gain of $7.28 in the price leading up to the dividend announcement.
Analyzing the past four dividends of EG, this strategy yielded capital gains that eclipsed the dividend amount three out of four times, resulting in a total capital gain of +$52.47. In contrast, the total dividends paid during the same period amounted to only $7.50. The following table provides a breakdown:
| Ex-Dividend | ——Price 2 Weeks Prior—» | ——Price 1 Day Prior—» | Run Gain/Loss | |||
|---|---|---|---|---|---|---|
| 09/16/24 | 2 | 08/29/24 | 390.42 | 09/13/24 | 382.75 | -7.67 |
| 05/29/24 | 2 | 05/13/24 | 381.18 | 05/28/24 | 388.46 | +7.28 |
| 03/18/24 | 1.75 | 03/01/24 | 369.92 | 03/15/24 | 392.87 | +22.95 |
| 11/28/23 | 1.75 | 11/10/23 | 384.68 | 11/27/23 | 414.59 | +29.91 |
| Div Total: | 7.50 | “Divvy Run” Total: | +52.47 | |||
Looking Ahead: Everest Group’s Upcoming Dividend
In approximately two weeks, Everest Group Ltd (NYSE: EG) will go ex-dividend for its upcoming dividend of $2.00 per share. Will the trend of Dividend Runs continue?
Upcoming Dividend: $2.00/share
Ex-Div Date: 11/27/24
Payment Date: 12/13/24
Dividend Frequency: Quarterly
Full EG Dividend History »
While past performance does not guarantee future results, EG remains a noteworthy dividend stock for investors interested in Dividend Runs, highlighting its implied annualized yield of 2.17%.
Stay tuned for future Dividend Run candidates, and to receive email alerts directly to your inbox, consider signing up for our free Dividend Alerts service at DividendChannel.com.
Also see:
· ETFs Holding VECO
· FNV Options Chain
· PARAA Historical Earnings
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
