AEMRICH wrote:Hey guys i've got a question involving stocks. My first question is when you short a stock do you still get the dividend? Say you find a stock that has a 14% dividend, if you were to buy 500 shares of this stock and then short 500 shares of this stock (at the same price) for a year this would neutralize any gains and loses yes? but you would still be getting 14% gain on 1000 shares of this stock minus your transaction fees. 14% is almost 3x more than any CD is offering. Is there a flaw in my thinking??
Your not taking other important factors into account. As stated above you will receive dividends on the 500 shares which you own, but not on your 500 borrowed shares you are shorting.
- There are transaction fees
- There are taxes on dividends
- Not positive but I believe after you close your short position you are required by law to hold your long position for a minimum of 60 days. If you do not do this there is some sort of capital gains tax.