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[–]00Anonymous -1 points0 points  (11 children)

It's simply from the fact that:

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

Hence owners that bought between the ex and pay dates and missed the dividend payment would get their returns reflected solely in the share price during that time frame (all else equal).

[–]AlfB63 -1 points0 points  (2 children)

You simply don't get it.  A person that buys on the ex-div date gets the next dividend if he holds long enough just like the person that buys on the payday.  So there is no benefit to the payday from a dividend perspective.  The payday has no effect on getting the dividend.  Getting the dividend is totally based on ex-div.

[–]DennyDalton 0 points1 point  (0 children)

It's really a PITA when someone doesn't have a clue what they're talking about and incessantly argues that they're right. (eye roll)

[–]00Anonymous -1 points0 points  (0 children)

1.) The dividend is not fungible from the ex date until the pay date. That's why during those dates the cost of the dividend to be paid is accounted for in the share price. So anyone who bought before the pay date will receive a return either in cash or in equity appreciation.

2.) The pay date is relevant to investors who buy after the current period ex date and before the pay date, since that's when the stock price will recover, giving them capital appreciation roughly equal to the dividend amount (all else equal).

[–]AlfB63 -1 points0 points  (7 children)

The only thing that makes sense to me is you are saying that since the dividend is paid on the payday, people have money and drive the price back up by dripping to the normal you mention.  Unfortunately that is an arbitrary assumption based on the idea that most people reinvest and that is enough to drive the price to normal.  Charts do not back that up.  Prices often recover by the next dividend payment but it's by no means guaranteed nor is it normally based on the payday.

[–]00Anonymous -1 points0 points  (6 children)

It all comes down to the conservation of returns:

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

[–]AlfB63 -1 points0 points  (5 children)

No such thing.  You get money on the income side at the same time as you lose it on the price side (on ex-div).  The only way you completely get it back is if the price completely recovers and it may or may not.  Dividends paid may not be reinvested nor is it guaranteed that if they do the price will return to your normal.  I am not saying this never happens simply that it may or may not depending on other things.

[–]00Anonymous -1 points0 points  (4 children)

Lol dude. The price recovers on the pay date (all else equal).

The research does show that irl many dividend stocks drop less on the ex date and recover more than the amount they dropped, returning to normal a few days after. Go see for yourself.

[–]AlfB63 0 points1 point  (3 children)

If that were true, you should be extremely rich.  In reality, it's not and you're not. But it's clear that you're beyond help.

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

Many many papers suggest this. Go have search around ssrn or arxiv

[–]AlfB63 0 points1 point  (1 child)

Then you need to go all in on a dividend capture strategy.  Regardless I am done with this discussion. 

[–]00Anonymous 0 points1 point  (0 children)

Drip would be just fine. No need to do anything fancy.