A Potential Dividend Run Alert was issued this morning for Phillips 66 (NYSE: PSX) via the DividendChannel.com Dividend Alerts service, which offers free email notifications. We will examine the details of this development more closely.

To begin, it helps to understand the idea of a Dividend Run. This concept came to light during a prior ValueForum event. To grasp it fully, consider how a stock typically behaves on its ex-dividend date.

The ex-dividend date is the first trading day on which new buyers of the stock lose eligibility for the upcoming dividend payment. To qualify for that dividend, shares must be acquired prior to this date.

Assuming all other factors remain constant, the share price is generally anticipated to decline by the dividend amount on the ex-date. This adjustment aligns logically with the loss of dividend rights after that point. If the price failed to adjust downward by the exact dividend value, buyers would effectively pay an extra amount for identical shares.

Conversely, if a stock is projected to fall by the dividend sum on the ex-date, it follows that the price may experience upward movement in advance of the dividend. Without such periodic rises, repeated ex-date drops would eventually drive the share value to zero, which contradicts the reality of a profitable company distributing ongoing dividends. Thus, a form of built-in upward pressure often emerges ahead of each dividend, creating potential for a Dividend Run.

The precise timing for capturing these effects varies among investors. Some target specific dates for purchases and sales, while others apply dollar-cost averaging. Certain approaches involve buying shortly before the ex-date, collecting the dividend, and selling afterward. Alternative methods focus on selling the day prior to the ex-date to emphasize capital gains, with a common window being roughly two weeks or ten trading days before the intended exit.

As an illustration, the 1.15 per share PSX dividend went ex-dividend on 02/24/25. Shares closed at 128.78 on the preceding trading day. Ten trading days earlier, on 02/06/25, the closing price stood at 120.82, reflecting a gain of 7.96 over that interval.

Reviewing the prior four dividends from PSX, this two-week approach yielded capital gains exceeding the dividend in all four instances, producing a cumulative Divvy Run of 28.54. This total surpasses the combined dividend payouts of 4.60 across those periods. The breakdown appears below:

Ex-Dividend	Price 2 Weeks Prior	Price 1 Day Prior	Run Gain/Loss
02/24/25	1.15	02/06/25	120.82	02/21/25	128.78	+7.96
11/18/24	1.15	11/01/24	120.01	11/15/24	130.91	+10.90
08/20/24	1.15	08/05/24	131.64	08/19/24	139.34	+7.70
05/17/24	1.15	05/02/24	143.87	05/16/24	145.85	+1.98
Div Total:	4.60	Divvy Run Total:	+28.54

Approximately two weeks from now, Phillips 66 will reach the ex-dividend stage for its next quarterly payout of 1.20 per share, scheduled for 05/19/25 with payment on 06/02/25.

Historical results offer no assurance of future outcomes. Nevertheless, investors who incorporate Dividend Runs into their strategies may find PSX noteworthy given its implied annualized yield of 4.48 percent.

Additional Dividend Run opportunities will be highlighted in future updates. Those interested in receiving alerts directly may sign up for the free Dividend Alerts service from DividendChannel.com.

Also see:

The Online Investor, SYNA Average Annual Return, CLNS Videos

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.