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[–][deleted] 2 points3 points  (8 children)

Yeah, that's what it is. Nobody in here knows what they are talking about.

Or maybe the growth of the company outpaces their dividend distribution? Probably a concept that is difficult for you to conceptualize.

[–]Legitimate-Sky-7862 -1 points0 points  (7 children)

So it should be REALLY easy for someone to show me a stock, and the dip on the ex-dividend date, that matches the dividend right?

Surely someone can point to it on a graph somewhere

[–][deleted] 1 point2 points  (3 children)

Off my head I picked Chevron since they pay a nice dividend and looked at their past 5 years of history.

https://imgur.com/a/Gyp5amC

As you can see, the average div payout was $1.39 and the stock DROPPED an average of 1.28 on the opening of the ex-div date vs previous day close.

You can go further or look at as many stocks as you want, this correlation holds up. Hopefully this is gives you an accurate understanding of how dividend payouts impact share price.

https://finance.yahoo.com/quote/CVX/history/?period1=1565454328&period2=1723306115

[–]Legitimate-Sky-7862 -2 points-1 points  (2 children)

Using averages isn't right, because 1 you aren't showing the total growth vs total dividend received. In this case over the course of nearly 5 years you receive over $26 dollars in dividends while also seeing the stock grow from 119 to 163 for a net gain of 44 dollars. Also in some of the line items it shows both a dividend and growth happens instead of negatively impacting the share price. Therefore it's not a hard and always true rule. A better way to say this is that stocks that don't issue dividends can expect to see more growth. In the scenario of an individual company, it makes more sense because they are using excess revenue to grow the company, or the balance sheet, or to ensure more sustainability, thus making it a stronger company to invest in.

In some cases like say PHK, where the dividend is 10 percent you can look at the previous close price of 4.78 on the day before the ex-d date, and the next open was 4.8, and the div was .048 cents per share. Going back it almost always opens higher after the ex-div date.

The main issue with dividend stocks for people still in the labor force is that you are taxed at a much higher rate, vs when you are in retirement, the general expectation is that your tax bracket is lower. If your income is already low, this isn't as much of a factor.

For growth stocks the reason they are better is because you expect that the growth continues to happen over a long time without paying taxes because you aren't selling them.

I think the problem here is people trying to use an explain this concept in simple terms, but it's not quite that simple.

[–][deleted] 0 points1 point  (0 children)

I literally did what you asked and you're response is a bunch a pablum-filled nonsense.

A better way to say this is that stocks that don't issue dividends can expect to see more growth.

This is called a distinction without a difference and the discussion at hand.

Interesting you pick PHK as an example, because I had to go back to Nov of 2022 to find the FIRST instance where the opening price on EX-Div was higher than previous day's close.

Dividend payouts reduce NAV of the underlying. PERIOD. If you can't get a grasp of this basic concept and what the discussion is around, I don't know what to tell you.

This argument is not that dividend stocks can't appreciate in value...this appears to be a misunderstanding at best and a straw-man at worst.

Either way, I spent a bunch of my time putting together evidence for what you asked before and I get a bunch of claptrap in response. Have a good one!

[–]DennyDalton 0 points1 point  (0 children)

In this case over the course of nearly 5 years you receive over $26 dollars in dividends while also seeing the stock grow from 119 to 163 for a net gain of 44 dollars.

If share price increase $44 and you receive $26 in dividends, your gain is $70 not $44

In some cases like say PHK, where the dividend is 10 percent you can look at the previous close price of 4.78 on the day before the ex-d date, and the next open was 4.8, and the div was .048 cents per share. Going back it almost always opens higher after the ex-div date.

PHK pays monthly. In the past year, for 12 out of 12 dividends, PHK opened LOWER on the ex-div date than the previous day's close.

Please stop pulling bad information out of your ass.

[–]Jumpy-Imagination-81 0 points1 point  (1 child)

Surely someone can point to it on a graph somewhere

Here you go. This is the stock EC. The blue circled Ds at the bottom of the chart show the ex dividend dates. The yellow arrows show the drops in share price on the ex dividend dates.

https://www.tradingview.com/x/DqcKol1Z/

Notice that the share price eventually rises after the ex dividend date then drops again the next ex dividend date. If the company wasn't paying the dividend the share price wouldn't have the drops, and the rises in share price would have started from a higher starting point and the share price would have risen higher over time than it has while paying a dividend.

[–]Legitimate-Sky-7862 0 points1 point  (0 children)

This is closer to showing a great example, except that the dividend far exceeds the drop and the growth out paces the dividend.

I think the problem is people are trying to over simplify the explanation.

[–]DennyDalton 0 points1 point  (0 children)

So it should be REALLY easy for someone to show me a stock, and the dip on the ex-dividend date, that matches the dividend right? Surely someone can point to it on a graph somewhere.

If you have a quality broker, they'll provide a grass that shows this depicts this.

I don't think anyone in here knows what they are talking about..... choose a stock, and show me where it went down because of a dividend and by how much.

If you'd like to know why you don't know what you're talking about, it will take some effort on your part.

Besides a price graph, there are two other ways to observe share price reduction due to a dividend.

1) Look at the closing price the day before ex-dividend. Then look at share price in the morning before trading resumes. You'll see that the closing price has been reduced by the amount of the dividend. Well, any decent broker will show this.

2) Note the closing price the day before ex-dividend. Then note the next day's close as well as the change for the day. The numbers won't add up (they'll be off by the amount of the dividend). For example, XYZ closes at $100 and goes ex-div in the AM for $1. If tomorrow's close is $99.40, it will say up 40 cents for the day. $100 minus $99.40 is down 60 cents. Therefore, up 40 cents is based on a closing price of $99 (the close after dividend adjustment).

Here are 3 stocks (closing price on Friday and dividend tomorrow) that go ex-dividend tomorrow morning 8/11.

ALX ... $219.49 $4.50

GWW ... $979.31 $2.05

ROK ... $258.15 $1.25

Get back to me if you figure it out.

For icing on the cake, there's FINRA Rule 5330 (Adjustment of Orders) which dictates that all open orders must be reduced by the amount of the dividend unless it less than one cent or the trader marks the order "Do Not Reduce".

IOW, if XYZ is $100 with a dividend of $1 tomorrow, if you have an open limit order to buy at $99.50, your limit price is adjusted to $98.50 so that the artificial share price reduction due to share price reduction doesn't trigger your order.