Definition of "Dividend Capture"

Investment strategy whereby the investor buys the stock roughly two weeks before it goes ex-dividend and then sells it about two weeks after it has gone ex-dividend in order to collect the dividend and make a small profit on the trade. On the stock's ex-dividend date, its price will drop by the amount of the dividend. The theory is that the stock's price will work its way back up to the price it was at before the ex-dividend date. This allows the investor to sell slightly above the purchase price. Thus, the investor is able to collect the dividend and realize a small capital gain in about four weeks. Also referred to as a "dividend rollover plan."