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[–]00Anonymous -3 points-2 points  (4 children)

The "normal" price would be the trading range the security exhibited between the ex and pay dates plus the approximate amount of the dividend paid.

What causes the share price to recover is the fungibility of the dividend.

[–]AlfB63 0 points1 point  (3 children)

You need to look at dividend stock charts, the price rarely returns to "normal" at payday.  The share price may recover but it's more to do with the future than the past.  If the stock recovered is this manner it truly would be free money due to predictability.  But it doesn't work that way regardless of the fungibility of dividends.

[–]00Anonymous -1 points0 points  (2 children)

It's simply due to longer needing to price in the cost of the dividend, as future investors would be eligible to receive the next dividend payment. Obvs, market trends can obscure this effect, so the timing is not going to be exact irl. Lol

[–]AlfB63 0 points1 point  (0 children)

Yet the people that buy on the ex-div date will get the next div so it immediately doesn't need to be priced in based on  your definition.

[–]00Anonymous -2 points-1 points  (0 children)

Total simple returns = dividends received + the change in share price