Ex-Dividend Date

Why the price falls that day

At the ex-date open, the price theoretically discounts the exact dividend amount: the company is worth that much less because that cash is already committed to the previous day's shareholders. A €50 stock with a €1 dividend will open around €49 — normal market noise can mask it, but the adjustment is there.

The "dividend capture" trap

The logical consequence of that adjustment: there is no trick in buying the day before, collecting, and selling the next day. What you gain in dividend you lose in price — and on top you pay tax on the payment and fees on both trades. Dividend-capture strategies are, for retail investors, an elaborate way of gifting money to the tax office and the broker.

Common mistakes

• Buying on the ex-date thinking you'll collect: you arrived exactly one day late.
• Panicking at the ex-date drop as if it were bad news: it is arithmetic, not the market.
• Chasing imminent dividends when choosing what to buy: long term, collecting this payment or the next is irrelevant; the business is what matters.