Ex-Dividend Playbook: Hold High Fill-Rate Stocks Long Term, Trade the 3 Days Before Ex-Dividend Short Term
TL;DR: For ex-dividend plays, long-term investors should hold stocks with high yields and a high chance of filling the dividend gap, while short-term traders should only play the 3 days before ex-dividend to chase turnover, because dealers buy heavily before the ex-dividend date to hedge warrants they issued and sell heavily on the day, so the move is concentrated up front.
Key ideas
- The "520 rally" has no statistical basis: around 520 in past years the index has risen and fallen with roughly 50% odds each way, foreign investors are net sellers, investment trusts are buying only through passive ETF flows, and the National Team net sold NT$38 hundred million at the 11000 level on April 30, so the advice is to be cautious and follow the National Team.
- Foxconn has paid mainly cash dividends since 2013 and this year pays 4.2, and over 10 years it has filled the dividend gap in 8, an 80% rate; but the stock that can really ignite the ex-dividend rally and take over from the 520 rally is TSMC, the heaviest weight in the index, not Foxconn.
- Long-term ex-dividend investing needs principles: the company has a future, ROE and revenue growth are ideally rising, the past fill rate is above 70%, and the cash payout ratio does not exceed 100%; go further by picking stocks with a high cash yield and a high fill success rate, buying after the ex-dividend date, selling once the gap fills, then moving to the next stock.
- The short-term approach is to play only the 3 days before ex-dividend and chase turnover: many people buy warrants to take part in ex-dividend plays, and dealers who issue them are forced to buy the stock to hedge, so they buy heavily before the ex-dividend date and sell heavily on the day; over 10 years Foxconn has risen on ex-dividend day 89% of the time, averaging a 2.4% gain when it rose.
- Companies with large stock dividends often rally on the ex-rights day: Sinli paid 25 and hit limit-up on the ex-rights day and for 3 days in a row; the strategy is to buy 1 day before ex-rights, decide whether to sell the next day depending on whether limit-up holds, and sell the shares received later.
Section summaries
2:50The 520 Rally and the Big 8 State Banks' Flows
The show reads the 520 rally through a fortune slip. The host interprets it to mean 11000 is the key hurdle and 14000 is too hard to reach. The 8 state-owned banks (the National Team) will not say outright that they are letting go, but they net sold NT$38 hundred million at the 11000 level on April 30. Their pattern is to buy heavily in big drops and trim once the index reaches 11000, so the advice is to be cautious and follow the National Team.
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6:55A Full Look at Foreign, Investment Trust and Retail Flows
The main net sellers in this move are foreign investors. Investment trusts sold in the previous wave, admitted a mistake and bought some back recently, then sold again yesterday. Retail investors were bullish for 7 days in a row, the strongest buying in this wave, but turned bearish yesterday, and the market fell sharply today. Overall, almost all flows lean bearish, with only investment trusts buying through passive ETF flows; even the National Team shows signs of leaving on the eve of 520. Gu Yu (股魚) argues that engineers should look only at the numbers.
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9:01520 Rally Statistics and Foxconn's Dividend
Looking at index performance around 520 in past years, it has risen and fallen with roughly 50% odds each way, like a coin toss, so Gu Yu (股魚) concludes there is no such thing as a 520 rally. The talk then turns to Foxconn's cash dividend of 4.2, the second highest in its history, with a yield of 5.2%. If Foxconn rises the Taiwan market will rise, which leads into the ex-dividend topic.
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10:15How Foxconn's Dividend Policy Evolved and What It Means
A look back at Foxconn's dividend policy: early on it paid both cash and stock dividends, and after 2013 it sharply raised the cash share, reflecting slower growth and simply returning cash to shareholders. The big cash payout may mean major shareholders need money and are taking dividends, or it may mean the company's growth momentum is suppressed, so readers should interpret it with care.
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11:51Foxconn's Gap-Fill Odds and TSMC as the Igniter
Foxconn's yield has exceeded 5% for 3 years in a row, and its EPS has been steady at 7–8 for a long time, so the stock bounces within a range with limited room for imagination; still, over 10 years it filled the dividend gap in 8, an 80% rate. But the stock that can really ignite the ex-dividend rally and take over from 520 is TSMC, the heaviest weight in the index, not Foxconn.
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14:16This Year's High-Yield Stocks and Selection Principles
This year, more than 100 stocks online have yields of 5% to 10%, at least 1% higher than last year on average, and any list you open shows 6% or more. Long-term investors can take part in the whole ex-dividend season, but must follow principles: the company must have a future, ROE and revenue growth should ideally be rising, and the past fill rate must be above 70% to count as credible.
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16:06Ex-Dividend Selection Criteria and the Short-Term Tactic
The selection principles also include a reasonable yield, since too high or too low is bad, and a cash payout ratio not above 100%: earning 3 but paying 6 means major shareholders need cash and there is a story behind it. The host cites a student who put 100 萬 fully into ex-dividend plays and made 51 萬 in 19 days (100 萬 became 151 萬) by playing only 2–3 days at a time, constantly switching stocks to chase turnover, and playing 10-odd stocks a month on average. Foxconn faces heavy selling pressure in its flows (one broker branch sold 4400 lots in a day), so he plays it for only 3 days: over 10 years Foxconn rose on ex-dividend day 89% of the time, averaging 2.4% when it rose, so buy 1–2 days before and sell on ex-dividend day.
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20:21Dealers and the Foxconn Ex-Dividend Move
Dealers buy heavily before ex-dividend and sell heavily on the day, because many people buy warrants to take part in ex-dividend plays, and dealers who issue the warrants are forced to buy the stock to hedge. In 2019, 2018 and 2017, dealers bought heavily in Foxconn before the ex-dividend date and sold on the day; in 2018 and 2017 major players bought too and the stock rose for 1–2 days beforehand, and the same holds going back 10-odd years. Foxconn rises especially when it pays stock dividends, and after switching to cash in 2013 it is not as fun to play; also, playing only Foxconn gives just 3 days a year, so other targets are needed.
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22:06E.Sun Financial and the Stock-Dividend Trick
Dealers also bought E.Sun Financial heavily before its ex-dividend date. It is one of the few financial holding companies that pays both stock and cash dividends, its ex-rights day moves are strong, and warrant leverage is high: when the stock rises 1%, some warrants rise 10%. The talk then turns to the stock-dividend trick: in 2018 the biggest stock dividend in all of Taiwan came from Sinli, which paid a 25 stock dividend (2.5 new shares per lot).
▶ Watch from here23:31Trading Strategy for High Stock-Dividend Ex-Rights
Sinli paid 25, hit limit-up on the ex-rights day, and kept hitting limit-up for 3 days in a row. In the early days tech stocks all paid stock dividends, even giving 2.5 free shares for every 1 lot, but people who joined ex-rights at 170-odd received shares worth only 40-odd. The strategy is to buy 1 day before ex-rights; if it is locked at limit-up on the ex-rights day, wait until the next day, and if it is not locked, sell, then sell the shares received later. Weirun in 2017 was also a high stock-dividend payer and hit limit-up on its ex-rights day. Companies with big stock dividends often rally on the ex-rights day, but far fewer companies pay stock dividends now, and one should not hold long, only trade those 3 days.
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25:32Stock-Dividend Rankings and Lessons for Long and Short Term
When too much stock is paid, the yield is distorted, so there is no need to spend long on such stocks. This year's top of the stock-dividend ranking is VHQ-KY and Ren Tai Qin (任太勤), each paying 5, so you can watch the move on the payout day. For high stock-dividend payers, buy 1 day before ex-rights; in the host's experience, the first day after ex-rights usually rises sharply, and you can sell then and sell the received shares later, still making a profit overall. Gu Yu (股魚) thinks small retail investors can hardly slip away that quickly, and suggests borrowing the turnover idea for the long term: pick stocks with a high cash yield and a high fill success rate, buy after ex-dividend, sell once the gap fills, then switch to the next one; the ex-dividend season from June to September sometimes lasts as long as 4 months, so you can rotate several times.
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