## Stock Price Rebound vs Decline After Ex-Dividend? Understand These Three Factors to Make the Right Judgment

Many investors are interested in high-dividend stocks but also have doubts. Indeed, companies that pay stable dividends often represent solid business models and healthy cash flows, and even Warren Buffett is fond of such stocks. But the question is—**Does the stock price always fall on the ex-dividend date? How should you choose the entry timing?**

The answer isn't so absolute. Historically, stock prices can rise or fall after the ex-dividend date; it’s not necessarily a decline.

### Theoretical Logic of Price Adjustment

First, let's clarify how ex-dividend affects stock prices. When a company distributes cash dividends, this money flows out of the company's assets, so the stock price adjusts downward accordingly. Here's a simple theoretical calculation:

Suppose a company's stock price before ex-dividend is $35, which includes $5 in cash reserves. The company decides to pay a special dividend of $4, leaving only $1 as reserve. On the ex-dividend date, the theoretical stock price would adjust from $35 to $31.

In the case of rights issues, it's a bit more complex. Suppose the stock price is $10, the rights issue price is $5, and the ratio is 1:2. The theoretical post-rights issue price would be (10-5)/(2+1) ≈ $1.67.

But the key point is—**theoretical calculations often deviate from reality**.

### Why does the stock price vary so much after ex-dividend?

In reality, the stock price movement on ex-dividend days is influenced by multiple factors, not just mathematical calculations.

Take Coca-Cola as an example. This company has a long tradition of paying dividends. On the ex-dividend dates of September 14, 2023, and November 30, 2023, the stock actually rose slightly; whereas on June 13, 2025, and March 14, 2024, it declined slightly. Apple’s situation is even more interesting—due to the tech stock hype, on November 10, 2023, the ex-dividend date, Apple’s stock rose from $182 to $186, a noticeable increase.

Industry leaders like Walmart, Pepsi, and Johnson & Johnson also often rise against the trend on ex-dividend days. Why? Because **stock price movements are affected by market sentiment, company performance, investor expectations, and other factors**.

### Is it worthwhile to buy after ex-dividend? It depends on these three points

**First, the stock price performance before ex-dividend**

If the stock price has already risen to a high level before ex-dividend, many investors will take profits early, especially those seeking tax benefits. Buying at this point may mean catching a falling knife, which isn't advantageous.

**Second, judging from historical trends**

Looking back, cases where stock prices fell after ex-dividend are more common. This is not friendly to short-term traders—buying then risks losses. However, if the stock continues to decline until it hits technical support and begins to stabilize, it could be a new buying opportunity.

**Third, the company's fundamentals and holding period**

For companies with solid fundamentals and leading industry positions, ex-dividend is just a price adjustment, not a reduction in value. Buying after ex-dividend and holding long-term often allows you to acquire quality assets at a better price.

### Two key concepts to understand

**Price Rebound (填權息)**: Although stock prices temporarily decline after ex-dividend, as investors remain optimistic about the company's prospects, prices gradually recover to pre-ex-dividend levels. This indicates market optimism about the company's future.

**Price Stickiness (貼權息)**: Stock prices remain sluggish after ex-dividend and fail to return to previous levels. This usually suggests investor concerns about the company's future performance, possibly due to poor earnings or market environment changes.

### Don't overlook these hidden costs

If you buy through a personal regular taxable account, you face a double hit after ex-dividend—unrealized losses from falling stock prices, plus taxes on the dividends received.

Additionally, there are transaction fees and taxes. For example, in Taiwan’s stock market, the transaction fee = stock price × 0.1425% × discount rate (usually 50-60% of the standard rate); transaction tax varies by stock type—0.3% for regular stocks, 0.1% for ETFs.

These costs accumulate and can significantly erode returns in frequent short-term trading.

### Investment Strategy Suggestions

Ultimately, the direction of stock prices after ex-dividend depends on multiple factors working together. If you are a long-term value investor focusing on stable cash flow and company growth, buying quality stocks around the ex-dividend date is not inappropriate and may even be a good opportunity to add positions.

However, if you aim to arbitrage during short-term fluctuations before and after ex-dividend, you need to analyze technical signals, market sentiment, and company fundamentals more carefully, rather than blindly chasing highs or panicking and selling.

Most importantly—**develop a strategy based on your investment goals and risk tolerance. Since stock prices after ex-dividend are unpredictable, thoughtful decision-making is more valuable than trying to forecast prices**.