Clorox: Ex-Dividend Opportunity?

As I was scanning the charts early this Monday morning, my scans came up with a few more short-sell candidates than new buy long positions. It looks like the broad market is headed back down. Other than one that stood out this week, my scans didn’t really show any new buy or sell opportunities. What my scans did come up with is a buy long candidate on a stock that is going ex-dividend this month.

Buying long into dividend paying stocks and stocks that are going ex-dividend can provide a good reward to risk right now. Not all high dividend paying stocks and stocks going ex-dividend are candidates for this investing trading approach though. The financials might not be good candidates right now, as they still seem to be in financial trouble those companies involved in getting TARP funds are supposed to be restricted from increasing dividends, making acquisitions and buying back shares.

Buying into stocks before they go ex-dividend can be rewarding though, and are worth looking at in this current investing environment. This trading technique normally works best in bull markets. Buying into stocks going ex-dividend is a technique of buying stocks before their ex-dividend date, then selling the equity soon after the ex-dividend date, and still being entitled to receive the dividend. So now, the shareholder also has the possibility of gaining on the appreciation in stock price and receiving the dividend.

I’m putting a buy long call on a company that is going ex-dividend on 1/26/2009. It has a Yield of 3.38%, a P/E ratio of 16.0 and a PEG ratio of 1.66.

Buy Long Clorox (CLX)

• Buy Entry: 50.56 to 51.96
• Stop-Loss: 49.88
• Take Profit Areas: 55.49, 57.11, 58.73, 61.03

Clorox Buy Long Analysis

With the ex-dividend date coming soon, and after looking at the CLX chart, it looks like it has a good chance of moving up this week. This could provide a tight stop-loss in case there’s not enough buying pressure to get it to move up in the next five trading days before it goes ex-dividend.

Clorox Company Profile

The Clorox Company is a manufacturer and marketer of consumer products. The company markets brand names, including its namesake bleach and cleaning products. It also includes Green Works natural cleaners; Poett and Mistolin cleaning products; Armor All and STP auto care products; Fresh Step and Scoop Away cat litter; Kingsford charcoal; Hidden Valley and K C Masterpiece dressings and sauces; Brita water-filtration systems; Glad bags, wraps and containers; and Burt’s Bees natural personal care products.

It manufactures products in more than 15 countries and markets them in more than 100 countries. The Clorox Company sells its products primarily through mass merchandisers, grocery stores and other retail outlets. The company operates through two segments: North America and International.

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Disclosure: None

Comments

[livesinhiscar:]

I don't get the point of this exercise.
There is no free lunch or free money sitting on the floor to be picked up by retail investors on the stock exchanges.
If you capture the dividend, then when you sell the stock later, it will be lower by the amount of the dividend.
You gain nothing except the privilege of paying two comissions.

Jan 19 02:18 PM

[pickaroonwyo:]

Look at CLX fundamentals. High debt to equity, low cash to equity, negative book value. Makes sense to buy puts on ex-dividend eve.

Jan 19 06:00 PM