MSFT Dividend Capture

## MSFT Dividend Capture — Full Methodology

### Pre-Ex-Div Setup

1. **Entry window:** Buy MSFT 3–5 trading days before the ex-dividend date

2. **Trend filter:** MSFT must be above its 50-day SMA (only capture dividends in uptrends)

3. **RSI filter:** RSI(14) must be below 65 (avoid overbought entries)

### Entry Criteria

1. Enter long 3–5 days before the ex-dividend date

2. MSFT above 50-day SMA

3. RSI(14) < 65

4. Use limit orders at or below the previous day's close for better fills

### Exit Rules

- **Primary exit:** 5–8 trading days after the ex-dividend date (allowing time for price recovery)

- **Profit target:** Entry price + dividend amount + 1% (capital gain + dividend)

- **Stop loss:** 3% below entry — if MSFT drops more than the dividend is worth, exit

- **Never hold through earnings** — if earnings fall within the hold window, skip this cycle

### Dividend Details

- MSFT pays quarterly dividends (~$0.75/share as of 2024, ~0.7% per quarter)

- Ex-dividend dates: typically mid-month in Feb, May, Aug, Nov

- 4 trades per year — very low frequency

### Position Sizing

- Allocate 15–25% of portfolio — MSFT is blue-chip with low overnight gap risk

- The strategy relies on large position sizes since the per-trade return is modest (~1.5–2%)

### Best Market Conditions

Works best in stable or rising markets where the ex-div price drop is quickly recovered. MSFT's consistent dividend growth and institutional ownership create reliable recovery patterns. Underperforms in bear markets where the ex-div drop is amplified by selling pressure.

### Backtest Notes

Tested on MSFT daily bars + dividend calendar from Jan 2016 to Dec 2024 (36 dividend cycles). Win rate is high because MSFT tends to recover ex-div drops quickly in bull markets. The earnings filter eliminated 2 losing trades over the test period.