Aren't dividends meaningless since the price of the stock goes down anyway on the Ex-Date?

Answer 1

Not necessarily. Dividends are simply a redistribution of the earnings over that quarter. Those, combined with retained earnings, are the appreciation on your money that you can generally expect in an investment. In the US, companies sometimes pay dividends or even increase them during nonprofitable times but in some European countries the impairment of capital rule states that dividends may not exceed retained earnings. Anyways, if you buy the stock just before the ex-dividend date in order to get the dividend then you sell it, then yes, they are meaningless to you because you have traded your hard earned cash for taxable income. Surprisingly, many investors don't even worry much about the up or down movements in the stock, they consider the investment as a perpetuity. According to the clientele effect, different forms of investors desire different characteristics in a company, so if you are retired in a low tax bracket you may prefer high dividend income, but if you are a high-earning professional you may prefer stock appreciation-that way your earnings are not taxable until you sell.

Answer 2

Dividends are meaningless? Why would you think that? Dividends are evidence of the profitability of a company. Everything else being equal, I would much rather buy a stock that is profitable and paying dividends than a company that is not profitable and not paying dividends.

Answer 3

Dividends are paid to the shareholders or reinvested in stock.

Dividends are meaningless? I don't know what you mean. When a dividend is paid the shareholder receives actual dollars if the dividend is not used to buy additional shares of the stock.

I live on dividends, pay my bills, etc. To me they are very important.
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Answer 4

The lower price of the stock, after a dividend is paid, is a reduction "on paper" only. If it is a good, solid company, the price of their stock will soon increase it its pre-dividend level.

Answer 5

maybe, maybe not. its sure better than hoping your stocks will gain value through buying and selling, at least you are getting some of the money you invested in back.

Answer 6

No.