Doesn’t the drop in a stock price after the ex-dividend day cancel out the dividend gain for an investor?

623 views

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

24 Answers

Anonymous 0 Comments

You don’t get anything *extra*, yes. Only about 50% of stocks pay dividends, which means investors can see the profits of their investments go into increases in the stock price or get paid out directly in the form of dividends. A stock represents a share of ownership of the company which includes the bank account from which dividends are paid, so paying dividends reduces the value of the company. In essence it is just converting something a stockholder already owns into cash in their hand.

You are viewing 1 out of 24 answers, click here to view all answers.