Dividend Capture Captains: The 3 Best Blue-Chip Stocks for Tactical Traders


  • Blue-chips with high dividend yields, low beta and high institutional ownership are ideal for capture-the-dividend trades.
  • Bristol Myers (BMY) This Big Pharma stock has a dividend yield around 5.4%.
  • Duke Energy (DUK) A Big Electric play with a beta of 0.44.
  • Ennis (EBF) If there is such a thing, then this is the Big Copy Paper play with institutions owning 75%.
dividend stocks for tactical traders - Dividend Capture Captains: The 3 Best Blue-Chip Stocks for Tactical Traders

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Give someone a dividend and you pay them that day but teach them to capture the dividend and you provide investment income for life!

Executing a capture-the-dividend trade entails buying the stock before the ex-date so you are the shareholder of record. You then sell it to book the dividend income, making little if any capital gains (that would be nice but it is not the objective). There are many factors to consider in buying dividend stocks for tactical traders.  

The bigger the dividend the bigger the profits, obviously. Since you are going after the dividend and not capital gains, a low beta is preferable. Beta measures the volatility of the stock with 1 being the average. So the lower the beta the less chance of fluctuations that cost you money. That is also why you want a high percentage of ownership from institutional investors such as endowments, mutual funds, pension groups, etc., as they are long-term investors so you don’t have to worry about one dumping shares that cost you money if you are holding the stock. Around 70% institutional ownership is considered normal.

To maximize profits for capture-the-dividend trades, like all short-term buying and selling, certain steps should be considered. Using a tax-free account will increase profits. The same goes for no or low-commission trades. Critical here is outstanding execution as you are moving quickly to book limited profits so you want the best price both ways.  

Bristol-Myers Squibb (BMY)

Bristol-Myers Squib (BMY) logo displayed on a phone screen
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Large-cap blue chips with big dividends like Bristol-Myers Squibb (NYSE:BMY) are ideal for capture-the-dividend plays. There is plenty of volume for these dividend stocks for tactical traders to buy and sell without distorting the market. This liquidity is helped by institutional investors who own nearly 80% of the stock. They are generally in for the long-term income from the dividend stream.    

There are many other enticing features about Bristol-Myers Squibb.  The beta is very low at 0.45.  Traders do not have to worry about wild swings in the price costing money if on the wrong end of the move. A major advantage of capture-the-dividend trading is the limited exposure to market fluctuations as shares are ideally held for a limited time.  There is also a small short float so few are betting against this Big Pharma big cap.

Duke Energy (DUK)

The logo for Duke Energy (DUK) is seen on a sign at one of the company's offices.
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Even after living in Chapel Hill, home of the University of North Carolina (UNC) for years now and rooting for the Tar Heels with a hatred of all things Duke, one still has to admire what Duke Energy (NYSE:DUK) offers as a capture-the-dividend play!

At 4%, it has a high dividend yield, well over twice the S&P 500 average. The beta is low at 0.44. There is plenty of institutional ownership so you know the professionals are bullish. The short float is only 1.29% so there are not too many bears wagering the stock to drop.

As a Duke customer for years, I have no complaints as I am treated well: good services at good prices! Duke has a booming area for its power operations in the Carolinas, Florida and the Midwest. Like many utilities, it carries a great deal of debt. But that should not affect dividend payments as earnings are growing and expected to in the future. However, this is one of the many alluring aspects to capturing the dividend. You know when the payout will be paid, for the amount before you buy and sell the stock as expeditiously as possible for a profit!

Ennis (EBF)

A photo of several large rolls of paper in a warehouse.. RFP stock makes paper products.
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If an episode of “The Office” had featured the Dunder Mifflin Paper Company having an investment club, Ennis (NYSE:EBF) would be ideal for its capture-the-dividend trades!

For 104 years, Ennis has been doing exactly what its original name of Ennis Business Forms stated: providing goods and services like copy paper for its customers and their companies. Its shareholders have been treated very well, too, as it pays a 4.85% dividend yield. That alone makes it one of the more attractive dividend stocks for tactical traders.

Its beta is very low.  So is the debt and its short float. As for the future, earnings per share are expected to rise double that for the last five years. These features, and more, also make Ennis a candidate for long-term investing. The combination of a high income, low beta with strong institutional ownership makes Ennis a dividend stock for tactical traders to also profit from through the buying and selling of shares in a capture-the-dividend play. 

On the date of publication, Jonathan Yates did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/dividend-capture-captains-the-3-best-blue-chip-stocks-for-tactical-traders/.

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