Extra Space Storage Set for Upcoming Dividend: Is a “Run” on the Horizon?
Today, a “Potential Dividend Run Alert” was issued for Extra Space Storage Inc (NYSE: EXR) through our DividendChannel.com service, which provides free email alerts. Let’s delve into what this means.
Understanding Dividend Runs
What exactly is a “Dividend Run”? This term caught our attention at a past ValueForum conference. To grasp its significance, we need to explore the behavior of stocks around the ex-dividend date.
The ex-dividend date is crucial for investors. On this date, buyers of the stock will not receive the upcoming dividend. Therefore, to reap the benefits, investors must acquire shares before this date. Commonly, share prices dip by the dividend amount on the ex-dividend day, provided no other market factors come into play. If a buyer is entitled to a $1.62 dividend before the ex-date but not after, the expected price drop is logical. Otherwise, new investors would essentially pay $1.62 more for the same share.
The Anticipation of a Dividend Run
If a stock is expected to decrease by the dividend amount on its ex-dividend date, shouldn’t it also rise before this date? If share prices continually fell with each dividend payout, they would inevitably reach zero, which makes no sense for a profit-generating company. This creates a natural “pressure” for the stock price to increase in anticipation of upcoming dividends, leading to a potential Dividend Run.
That said, strategies for participating in Dividend Runs vary among investors. Some prefer targeting specific dates for buying and selling, while others use dollar cost averaging. A popular strategy involves purchasing shares shortly before the ex-dividend date, holding through the dividend payout, and then selling afterward. Contrarily, some choose to sell the day before the ex-date to maximize capital gains, often buying around two weeks prior to the sell date.
For example, consider EXR’s $1.62 dividend that went ex-dividend on 09/16/24. On the previous trading day (09/13/24), EXR shares closed at $177.90. Two weeks earlier (08/29/24), the price was $175.54. This reflects a $2.36 price increase leading up to the dividend payout.
Recent Performance
Looking back at the last four dividends distributed by EXR, this approach yielded a capital gain surpassing the dividend amount every time, totaling +$45.23 in gains, which exceeds the sum of the last four dividends at $6.48. Below is the detailed performance:
| Ex-Dividend | ——Price 2 Weeks Prior—» | ——Price 1 Day Prior—» | Run Gain/Loss | |||
|---|---|---|---|---|---|---|
| 09/16/24 | 1.62 | 08/29/24 | 175.54 | 09/13/24 | 177.90 | +2.36 |
| 06/14/24 | 1.62 | 05/30/24 | 141.68 | 06/13/24 | 158.53 | +16.85 |
| 03/14/24 | 1.62 | 02/28/24 | 138.29 | 03/13/24 | 147.84 | +9.55 |
| 12/14/23 | 1.62 | 11/29/23 | 129.53 | 12/13/23 | 146.00 | +16.47 |
| Div Total: | 6.48 | “Divvy Run” Total: | +45.23 | |||
In approximately two weeks, Extra Space Storage Inc (NYSE: EXR) will reach its ex-dividend date for the latest dividend of $1.62 per share. Will history repeat itself with another dividend run?
Upcoming Dividend Details:
Dividend Amount: $1.62/share
Ex-Div Date: 12/16/24
Payment Date: 12/31/24
Frequency: Quarterly
Full EXR Dividend History »
As the old saying goes, past performance does not guarantee future results. However, for investors who utilize Dividend Runs in their strategies, EXR appears to be an attractive dividend stock with an annualized yield of 3.79%.
Stay tuned for more potential Dividend Run candidates, and for those interested in receiving email notifications, sign up for our free Dividend Alerts service through DividendChannel.com.
Other Articles of Interest:
• Energy Stocks Hedge Funds Are Buying
• UGRO YTD Return
• Institutional Holders of TOST
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
