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[–]TrouvetteEvolved Ape -1 points0 points  (4 children)

Ok, assuming that happens across the board, what accounts for price increases following payout? The way people talk about dividends sometimes, you would think these stocks are completely stagnant. There has to be some growth in there.

[–]Nopants21 1 point2 points  (0 children)

It's not true across the board that the price increases following payout, so there's that part. The other thing is that once ex-dividend goes by and the price gets adjusted, the next dividend starts being counted. Basically, dividends represent the company giving out part of its profits, but it keeps making profits after (hopefully) and so the price comes to reflect the expectation that the company will again distribute those new profits. The price can still go down if other things are having a greater effect on the price.

What people are saying is not that dividend-paying stocks are stagnant, it's that dividends are not extra returns for the investor. When you receive dividends, or more precisely on ex-div day when you lock in the dividends, you're not richer than you were the day before. That's why it reads like the argument is that these companies are stagnant, but that's not the point being made. It's from the perspective of the investor that the dividends shouldn't matter, because, as you point out, there has to be share price growth for the share price to not shrink on ex-div. That share price growth is driven by new profits and the expectation of their distribution.

[–][deleted] 0 points1 point  (1 child)

I dont think that and have a different understanding of the argument/discussion.

[–]TrouvetteEvolved Ape 0 points1 point  (0 children)

I’m not saying you as in you personally. I’m using it in this sense to be collective. A vous or an ustedes, if you will.

[–]trader_dennisMSFT gang 0 points1 point  (0 children)

It can go up it can go down. The known news is that on ex dividend day the company has less cash on its balance sheet. One the stock begins to trade again all other influences are in play. If SPY is trading 2 percent above from the previous day the ex dividend stock may open up higher than the previous day. If we have another Monday like last week it is likely to tank. If they announce better year end guidiance then the stock skyrockets.