Dividend Trap in Stock Market: Avoid or Take Opportunity

Investments in securities in the form of shares of public companies are increasingly prevalent throughout the world. Moreover, transactions are now online using smartphones, so there are more and more actors or individual investors on the stock exchange. Dividends, which are profit sharing from public companies to shareholders, are one of the attractions for investors and brokers to invest in the stock exchange. However, it turns out that dividends are not that simple, there is a phenomenon called the dividend trap, where brokers seek profit from holding stocks that pay large dividends in the short term. Dividend trap becomes tricky when dividends that are supposed to provide profit, in fact, end up causing losses. Even though dividend traps have appeared on the capital market, there is still a lack of literature and scientific publications that discuss gambling on this subject. Our paper is a qualitative study, which explains phenomenology based on case examples, experience and expert opinion. In this paper, we will discuss the dividend trap, how to recognize it, avoid losses, overcome if it is trapped in it and even make it a learning thus an opportunity for investors and brokers to reap profits from the dividend trap. Dividend trap can be opportunity and threat. Investor able to take gain from dividend trap using some of tactical trading, including: take capital gain from short term raise between announcement and cum date, pre-emptive strike, know the information by attending general shareholder meeting, and conservatively wait until the stock price rebound.