Why Do Share Prices Drop After Dividend Is Announced?

[Chinyere]

Many new investors don’t understand why a share price drops after dividend payment.
This happens because of the qualification date and ex-dividend date. Once a company passes the qualification date, new buyers are no longer entitled to that dividend, so the price adjusts.

Do you think buying a stock just before qualification date is a good strategy?

 

[Mr.Simon]

Many new investors don’t understand why a share price drops after dividend payment.
This happens because of the qualification date and ex-dividend date. Once a company passes the qualification date, new buyers are no longer entitled to that dividend, so the price adjusts.

Do you think buying a stock just before qualification date is a good strategy?

Not really. Buying just for dividend often doesn’t give you an advantage because the price usually drops after the qualification date. You’re basically getting your own money back.

It only makes sense if you already believe in the stock long-term not just for the dividend.

 

[Ugobeauty]

Many new investors don’t understand why a share price drops after dividend payment.
This happens because of the qualification date and ex-dividend date. Once a company passes the qualification date, new buyers are no longer entitled to that dividend, so the price adjusts.

Do you think buying a stock just before qualification date is a good strategy?

Investors have different reasons for investing in a stock, while some chase noise, others follow fundamentals. If the investor is a long term investor then buying a particular stock before the qualification date is not totally a bad idea.

 

[Chinyere]

Investors have different reasons for investing in a stock, while some chase noise, others follow fundamentals. If the investor is a long term investor then buying a particular stock before the qualification date is not totally a bad idea.

You’re right

 

[Mr.Simon]

Investors have different reasons for investing in a stock, while some chase noise, others follow fundamentals. If the investor is a long term investor then buying a particular stock before the qualification date is not totally a bad idea.

You're right, if for long-term investors it's still a good strategy to buy, but for short traders no

 

[Chinyere]

Not really. Buying just for dividend often doesn’t give you an advantage because the price usually drops after the qualification date. You’re basically getting your own money back.

It only makes sense if you already believe in the stock long-term not just for the dividend.

Point