This morning, a **”Potential Dividend Run Alert”** was issued for Tyson Foods Inc (NYSE: TSN) via our DividendChannel.com Dividend Alerts service, a free email alert feature. Let’s take a closer look at what this means and the concept behind a Dividend Run.
### What is a Dividend Run?
The term “Dividend Run” might be unfamiliar to some, so it’s worth explaining. We first encountered this concept at a past ValueForum conference. To understand it, we need to start with the expected behavior of a stock on its **ex-dividend date**.
For those unfamiliar, the ex-dividend date is the trading day when any buyer of the stock is no longer entitled to the upcoming dividend. In other words, to receive the dividend, you must purchase the shares **before** the ex-dividend date.
All else being equal, the stock price typically drops by approximately the dividend amount on the ex-dividend date. This drop makes perfect sense because if the buyer is entitled to a $0.50 dividend before the ex-date, but not after, then the stock price needs to adjust accordingly. If it didn’t, buyers would effectively be overpaying for the stock.
### Why Should Stocks Rise Before the Ex-Dividend Date?
If stocks are expected to drop by the dividend amount on the ex-date, logic suggests that they should rise sometime before the dividend. Otherwise, if a dividend-paying stock always fell on each ex-date without rising beforehand, the share price would eventually fall to zero over time — which wouldn’t make sense for a company consistently earning profits and paying dividends.
Therefore, there is usually some built-in **pressure** for the stock price to rise ahead of the dividend, creating a potential **Dividend Run**.
### Timing Differences Among Dividend Investors
The timeframe to capture these Dividend Runs varies among investors:
– Some investors buy shares shortly before the ex-dividend date, hold to receive the dividend, then sell on or after the ex-date.
– Others prefer to sell the day before the ex-dividend date to maximize capital gains.
– Some use dollar-cost averaging or invest around specific target dates.
One popular strategy — especially among those focusing on capital gains — is to buy roughly two weeks (about ten trading days) before the targeted sale date.
### Example: Tyson Foods (TSN) Dividend Run Analysis
Consider the $0.50/share dividend from TSN that went ex-dividend on November 29, 2024. On the last trading day before the ex-dividend date (November 27, 2024), TSN closed at $64.45. Two weeks earlier (November 13, 2024), the share price was $63.30. This means TSN gained $1.15 over that two-week run-up to the dividend.
Looking back at the last four dividends paid by TSN, this strategy of buying about two weeks prior to the ex-date would have captured a capital gain exceeding the dividend 3 out of 4 times, with a total **Dividend Run** gain of +$2.40 in capital appreciation. Interestingly, this surpasses the total dividend payouts of $1.97 across those four dividends.
Here’s the data snapshot:
| Ex-Dividend Date | Dividend | Price 2 Weeks Prior | Price 1 Day Prior | Run Gain/Loss |
|——————|———-|——————–|——————-|—————|
| 11/29/24 | $0.50 | $63.30 | $64.45 | +$1.15 |
| 08/30/24 | $0.49 | $62.04 | $64.65 | +$2.61 |
| 05/31/24 | $0.49 | $60.71 | $57.07 | -$3.64 |
| 02/29/24 | $0.49 | $51.61 | $53.89 | +$2.28 |
– **Total Dividends:** $1.97
– **Total Dividend Run Capital Gains:** +$2.40
### Upcoming Dividend Information for TSN
In about two weeks, Tyson Foods Inc (NYSE: TSN) will go ex-dividend again for its latest dividend of $0.50 per share.
– **Upcoming Dividend:** $0.50/share
– **Ex-Dividend Date:** 02/28/25
– **Payment Date:** 03/14/25
– **Dividend Frequency:** Quarterly
Will the Dividend Run history repeat itself this time?
### Final Thoughts
While past performance is never a guarantee of future returns, TSN remains a solid dividend stock worth watching, especially for those employing Dividend Run strategies. With its implied annualized yield of 3.46%, it’s a stock to have on your radar.
Stay tuned for future Dividend Run candidates. If you’d like to receive email alerts directly in your inbox, consider enrolling in our free Dividend Alerts service, courtesy of DividendChannel.com.
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**Also see:**
– Canada Stock Channel
– OGE Dividend Growth Rate
– SCM Videos
*The views and opinions expressed herein are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.*
https://www.nasdaq.com/articles/upcoming-dividend-run-tsn
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