For instance, Volkswagen announced a special dividend payment of €19 in December per share. The share price dropped the next day by €19 as well. So as an investor, I didn’t gain anything (at least in the short term)? I received the dividend but my equity share is worth less that amount.
In: 3
If a company is making a steady profit, but otherwise everything is remaining the same then one of two things should happen:
1. The company keeps its profits in the company, meaning that the company gets more valuable over time since as well as the profitable business it now has cash in the bank
2. The share price increases slightly each year and then falls when it pays the dividend, repeating a constant cycle each year
The shareholders see the same return either way, either in cash or an increased stock price
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