Help me earn my RobinHood credit card! Just sign up for Robinhood Gold (not the credit card) with my link, this is not sponsored: robinhood.com/creditcard?referral_code=50cf1830 Hey guys, remember if you're in the US, you don't pay taxes on your dividends immediately, so any tax on the dividend wouldn't affect the amount shares you can buy with it since you pay taxes for the dividend later. So the math on the "buy before the ex-dividend date" column should be correct. And as far as the right-side calculations of using the dividends to buy more shares (hence the $0 cash left), why I chose not to utilize the reduced price is because some funds recover their NAV rather quickly after the ex-date, and your brokerage might have a lag in giving you your distributions. No one literally gets their distributions on the ex-dividend date. So by the time you get your distribution, it's unclear what the stock price would be. It's impossible for me to generalize scenarios given potential NAV recovery and distribution delay. So the right side calculations using the dividends to buy more shares use the full price for simplicity.

You left something out... that $2,500 dividend payment. When you buy on/after in your last scenario, you end up with 666 shares and $10 left to buy 0.66 of one more share at $15, giving you 666.66 total shares and no dividend payment to buy anymore shares. However, by buying BEFORE the ex dividend date, where you initially can only buy 625 shares, you get paid a $2,500 dividend payment one or two days later where you can then buy another 166 shares at the new $15 price and end with a total of 791 shares compared to only 666.66 shares by buying on/after the ex dividend date. So you actually end up being able to buy MORE shares by buying BEFORE the ex dividend date because you get that dividend payment to buy more shares at that new discounted price.

In my experience it will depend on the underlying stock. For instance NVDY recovers pretty quick after ex day, so I add to my position before ex day knowing this.

Good video, I currently own 11 YieldMax Etfs in my monthy dividend portfolio as well.

Loving your format and style, keep up the good work, you're quickly becoming the youtuber I recommend to people that want to learn

Steve, thank you for the great examples and insights. It’s very helpful as I learn my way around the high yield ETF space.

Love your video's. Keep up the good job. Learning a lot!! Thanks.

Excellent video! Thanks so much for the information! Very helpful 🎉

Great videos that you are making. Subscribed!

Holy cow! Was literally asking myself this question this morning! Thx for posting!

Great video! I like to add, if the stock goes up and you want to sell, buying at the lowest price, you will receive more cash back

The advantage I see is buying on ex dividend date is you get a better cost average and the amount of shares is basically the same if you drip the dividend received at the lower price.

Good analysis. I have something to consider. I want to buy before the x-date but I want to also sell covered calls. This generates additional income and tips the scale. Currently have one trade opened but not sure how it will be affected when the price drops.

Stevo, there’s an error in your analysis. In the before scenario, you are using the dividend to buy shares at the $20 price but it would be at the $19 or $15 price as the share price dipped by the div amount and wouldn’t immediately rebound to the $20 amount. There may indeed be benefit to purchasing after ex-div for tax considerations and the price may begin rebounding by the time you get your dividend but those seem to be outside the scope of your consideration.

another good video

Your buying more shares with the dividends after paying full price, so the NAV drop price would be your new price with dividend money reinvested back in. The 10k scenario with $500 dollars made in dividends: this would buy 26.3 more shares at $19 a share instead of 25 shares at $20 a share.

Excellent video 💯💯💯 Thank you! Time Value of Money???

Assuming the nav drop is the same as the dividend payment then it is better to buy it after the dividend payment. You have taxes due on the dividend payment of at least 15-20%. Where as if you buy it post declaration you have the same value but no taxes. Yes you have a lower basis point and will also be taxed if it is later sold above the purchase price but no one knows IF it will rise in value. Bottom line for me is that if the stock has good average dividend history and it is somewhat stable and the stock is not too close to its 52 week high then I would buy it post dividend payment.

I think your better off buying before because as far as the IRS is concerned you have made less because you bought high

I can’t get enough of these incredibly informative videos, I subscribed twice. 😂 Great job Stevo

You forgot to deduct taxes before ex div

For high-yield, I like to puchase on ex-dividend date. I would rather give up one month's distribution to secure a lower cost basis going forward. These things can drop and they can drop fast so always be mindful of your cost basis and sell out at a profit when you can to re-enter at a lower cost.

I like the video, and that you actually did the math correctly :)

Uhhh don't you want that $2500 to reinvest for the next month's dividend payment though? You would end up with even more shares?

So here’s the thing .. Crypto is very cyclical, so YBIT might be a situation where you want to buy as much as possible , right now , due to the Bitcoin cycle 🔃 📈 , regardless of before or after EX date because it can and will run away from you while your waiting . On something like YMAX, this video applies because it’s a long term hold and consistently buying at a cheaper price on YMAX will get you more shares and keep your cost basis lower. Great video Steve 0

Thanks for sharing this good content

Thanks for the clear explanation.

I m new and don t know what are you talking about.! Buy on / or after ex day you get 666 shares x 15 = 10,000 . Forget about 10.00 so small Buy before ex date you get 500 share then you use 2500 to buy at 15 for 166 at the result the share you own now is 666 shares at 15 = 10,000 Where is the profit ?

For a 541k annual dividend amount, you must have several million in this portfolio. So I can see a benefit to this. Just to make an example because I don't expect you to show us your account value, let's say you used 2.5 million to do this. If you get even 500k per year, takes 5 years to make your money back and to then essentially play with house money. All the while you can pretty much live your life to the fullest and not even work if you chose to. The chances are you'll probably be down %-wise in the positions but you'll have made the initial investment back. I have 350k currently in a portfolio sitting 60% in cash because I'm convinced a horrible bear market is coming sooner than later. However after seeing videos like this I'm slowly convincing myself that leaving so much in cash is stupid. My only stipulation is that these YieldMax funds have not been tested through a bear market yet and I don't want to get stuck in any possible reverse splits.

Love your dog and you need to introduce your pup! :)

I love what you have done here. You left out an important part though. The cheaper you buy, the higher the yield on cost. Also, there are potential tax implications on the dividend. Over time, the yield on cost matters more.

Isn’t the number of shares you can buy on the right side (before x-date) incorrect?

I buy prior low, sell prior hi

I like just buying the stock lol idc when its just when ever i have money xD

I thing you have an error in your calculation on 7:36 (right column - before ex-div) With 400$ you can by 20 shares (not 21). Yes you get 20$ dividents, but AFTER ex-div day. So the share price would be 19$ not 20$. So you ALSO would habe 21 shares and 1$ left. No difference.

thanks man…..You didnt mention total account value difference between buying before and after or on ex dividend date…my way i like to buy on or after ex dividend date so i can average down the stock price

If you compound do you get cheaper shares??

You talked about dripping and having 21 shares in both of the $400 cases. However, the example for buying before ex-div was erroneous because your 21st share would only cost $19 on drip--not $20. So you'd have 21 shares and $1 left just like when buying on/after ex-div. You made the same mistake on the other examples and did not account for the fact that your drip price would be less. In the end, you'd have the same number of shares and $ left in all scenarios.

I need to pay tax for the dividends, so my total value decreases since the price will also drop. Should I reinvest my dividends and hope the price will go up?

Not related to this, but were you at Costco in HB pumping gas on Wednesday (today) morning?

Curious, when we "auto drip" our dividends (in Rhood)... are the new shares purchased immediately after the exdate?

When you reinvest the dividends, the additional shares are purchased at the ex-div price and not at the "full price." Your illustration of the "buy before the ex-dividend date" scenarios is incorrect. There is no material difference between the before and after in terms of P&L. It has tax implications later on the cost basis. For some people, the "yield on cost" also matters.

So it really doesn’t matter ,

It must be tough paying that CA state income tax?

for custodia and receiving divs what are the best brokers?

What if i buy a day after ex date? will i receive the dividend for that month?

are you sure your calculation is correct? I don't see it that way. If you bet 10,000 at $20, you have 500 shares. Not 525. What am I missing 🤔?

buying using margin? keep in mind your margin interest is tax deductable !

Can I retire with 500,000 ?