TFPM

Will the dividend increase be reflected in the current price, and could it trigger a dividend‑capture trade?

Created August 06, 2025 at 09:07 PM

Short answer

Will the higher dividend be reflected in the current price?

Not yet. The market will only price‑in the new $0.0575 USD per‑share dividend (a 5 % increase to an annualized $0.23 USD) when the stock trades through the ex‑dividend date – the date on which the right to receive the dividend is no longer attached to the share. For Triple Flag the ex‑date will be the business‑day 2 September 2025 (the “record‑date” is the close of business on that day). Until the ex‑date passes, the share price will still reflect the old dividend expectation.
Could this announcement trigger a dividend‑capture trade?

Yes, the news creates a classic dividend‑capture opportunity for traders who are able to buy the stock before the ex‑date, hold it through the record‑date, and then sell after the ex‑date (or shortly thereafter). Whether the trade is worthwhile depends on several practical factors (price‑adjustment on the ex‑date, transaction costs, tax treatment, short‑selling or borrowing constraints, and the investor’s eligibility to receive the dividend).

Below is a comprehensive breakdown of why the price will adjust, how the dividend‑capture trade works, and the key considerations you should weigh before deciding to act.

1. How the dividend increase translates into price behavior

Event	What happens to the price	Why
Announcement (6 Aug 2025)	Minimal immediate impact; the market may price‑in the expectation of a slightly higher dividend, but the change is modest (≈ $0.0005 USD per share).	The dividend is still a few weeks away; the price already reflects the forward‑looking dividend yield, and a 5 % lift is small relative to typical price volatility.
Ex‑dividend date (≈ 2 Sep 2025)	The share price normally drops by roughly the amount of the dividend ($0.0575 USD) on the ex‑date, because new buyers will not receive the dividend.	Theory: a stock is worth $D$ less once the right to the dividend is detached. In practice the drop can be a little larger or smaller due to market sentiment, liquidity, and tax effects.
Post‑ex‑date (2 Sep 2025 onward)	The price will settle around the new “ex‑dividend” level, reflecting the higher annualized payout ($0.23 USD) and any new information about the company’s earnings, cash‑flow, or credit quality.	The market now treats the stock as having a $0.0575 USD lower intrinsic value for that day, but the higher dividend may improve the longer‑term yield and attract yield‑seeking investors.

Bottom line: As of today (11 Aug 2025) the price still reflects the old dividend expectation. The adjustment will only be visible on or after the ex‑date (2 Sep 2025).

2. Dividend‑capture (or “dividend‑harvesting”) mechanics

Step	Action	Key timing	Result
1. Buy	Purchase TFPM shares before the ex‑date (i.e., on or before 1 Sep 2025).	Must settle (T+2) before the record‑date; most brokers enforce a “buy‑by‑ex‑date” rule.	You become entitled to the $0.0575 USD dividend per share.
2. Hold	Hold through the record‑date (close of business 2 Sep 2025).	No action needed; just own the shares at the close.	You will receive the dividend on the payment date (15 Sep 2025).
3. Sell	Sell the shares after the ex‑date (typically on 3 Sep 2025 or later).	The price will have already dropped by roughly the dividend amount; you can sell at the new lower price.	You lock‑in the dividend while exiting the position, aiming to keep the net profit after the price drop, commissions, and taxes.

Why some traders still find it attractive

Yield boost: The 5 % increase raises the forward annualized dividend from $0.22 USD to $0.23 USD, which for a stock trading around, say, $1.00 USD per share translates to a dividend yield of ~23 % (very high for a junior miner). Even a modest price decline may still leave a decent net return.
Short‑term cash: Capturing a $0.0575 USD per‑share cash payment can be useful for cash‑flow or to fund other positions.
Low‑cost entry: If the stock is thinly traded, the ex‑date price drop may be small relative to the dividend, making the “capture” profitable after accounting for commissions.

3. Practical considerations before executing a dividend‑capture trade

Factor	What to check	Impact on profitability
Ex‑date price adjustment	Historical ex‑div drops for TFPM (or comparable junior miners). If the market typically falls $0.06 USD (≈ 6 cents) on the ex‑date, you must earn at least that amount per share to break even.	A larger-than‑expected drop (e.g., $0.07‑$0.08 USD) can wipe out the dividend.
Transaction costs	Commission, bid‑ask spread, and any borrowing costs if you short‑sell to hedge. For low‑liquidity stocks, the spread can be 0.5‑1 % of price.	Even a $0.01 USD spread per share reduces the net capture.
Tax treatment	In most jurisdictions, dividends are taxed as ordinary income (or qualified dividend) and may be subject to a holding‑period rule (e.g., “dividend‑capture rule” in the U.S. where the dividend is taxed at the ordinary rate if the share is held < 61 days).	If you are subject to the higher ordinary‑income tax rate, the after‑tax return may be far lower than the pre‑tax dividend.
Eligibility	Some brokers enforce a “buy‑by‑ex‑date” rule that requires the trade to settle before the record‑date (T+2). Ensure you have enough time to acquire the shares and that the settlement system will not delay you.	Failure to meet the rule means you won’t receive the dividend despite buying before the ex‑date.
Short‑sale or borrowing constraints	If you intend to short‑sell after the ex‑date to lock in the price differential, confirm that there is a sufficient locate and that the stock can be borrowed.	A hard‑to‑borrow stock can make the short leg expensive or impossible, eroding the capture profit.
Market sentiment	The dividend increase may be interpreted as a sign of stronger cash flow, potentially offsetting the ex‑date price drop with buying pressure. Conversely, if the market views the payout as unsustainable, the price could fall further.	Positive sentiment can reduce the price drop, improving capture returns; negative sentiment can increase the drop.
Liquidity & volatility	TFPM is a junior miner; daily volume can be modest, and price swings of 5‑10 % are not unusual. A volatile environment can cause the ex‑date price to move away from the theoretical dividend‑size drop.	Higher volatility raises the risk that the post‑ex‑date price will be significantly lower (or higher) than expected, affecting the net outcome.

4. Example of a simple profitability calculation

Assumptions (illustrative, using a $1.00 USD share price):

Parameter	Value
Share price before ex‑date (buy)	$1.00
Dividend per share	$0.0575
Expected ex‑date price drop	$0.058 (≈ dividend)
Transaction cost (buy + sell)	$0.003 per share (0.3 c)
Tax rate on dividend (qualified)	15 %
Tax rate on capital loss (if any)	0 % (no loss)

Profit per share = Dividend – (price drop) – transaction cost

= $0.0575 – $0.058 – $0.003 ≈ ‑$0.0035 (loss)

After‑tax dividend = $0.0575 × (1 – 0.15) = $0.0489

Re‑compute: Profit = $0.0489 – $0.058 – $0.003 = ‑$0.0121 (still a loss).

Conclusion of the toy model: If the market drops exactly the dividend amount, the capture trade is not profitable after modest costs and taxes. The trade only becomes attractive if:

The ex‑date price drop is significantly less than the dividend (e.g., < $0.045 USD).
Transaction costs are negligible (e.g., $0.001 USD).
The dividend is taxed at a lower rate (e.g., qualified dividend with 0 % tax in a tax‑advantaged account).

Thus, a real‑world assessment must use the actual observed ex‑date price movement for TFPM, your specific commission schedule, and your personal tax situation.

5. Bottom‑line recommendations

Monitor the ex‑date price movement as the date approaches. If the market is already pricing in the 5 % increase (i.e., the share price has risen modestly), the ex‑date drop may be smaller than the dividend, making capture more viable.
Calculate the net expected return using your own commission rates and marginal tax rate. If the after‑tax dividend is less than the expected price decline plus costs, the capture trade is not worthwhile.
Check broker rules for settlement and eligibility. Ensure you can actually hold the shares on the record‑date; otherwise you will miss the dividend.
Consider alternative strategies: rather than a pure capture trade, you might simply hold the stock long‑term to benefit from the higher dividend yield and any potential upside from the company's mining projects. The capture trade is a short‑term, high‑risk play that may not align with a longer‑term investment thesis.

Final answer to the question

Will the dividend increase be reflected in the current price?

No. The price will only adjust on the ex‑dividend date (expected 2 September 2025). Until then the market still reflects the prior dividend expectation.
Could it trigger a dividend‑capture trade?

Yes. The announcement creates a classic dividend‑capture scenario: buying before the ex‑date, holding through the record‑date, and selling after the ex‑date. However, the profitability of such a trade hinges on the actual ex‑date price drop, transaction costs, tax treatment, and your ability to meet settlement requirements. If the ex‑date price decline is close to the dividend amount, the net return after costs and taxes may be negative, so a careful, case‑by‑case analysis is essential before attempting the capture.