Recently, many friends have asked me whether it's more profitable to buy stocks before or after the ex-dividend date. This is actually a good question because many people are still a bit unclear about the ex-dividend mechanism for dividend-paying stocks.

Let's start with the conclusion: stock prices do not necessarily drop on the ex-dividend date. I’ve noticed a common misconception that stock prices must fall on the ex-dividend date, but historical data shows that the situation is much more complex.

Take Coca-Cola as an example. This company has been steadily paying quarterly dividends for years. On the ex-dividend dates of September 14, 2023, and November 30, 2023, the stock actually rose slightly; meanwhile, on June 13, 2025, and March 14, 2024, there were small declines. Apple’s performance is even more interesting. On the ex-dividend date of November 10, 2023, the stock price increased from $182 the day before to $186, a noticeable gain. Industry leaders like Walmart, Pepsi, and Johnson & Johnson also often see stock price increases on ex-dividend days. So, stock price movements are influenced by multiple factors, not just the ex-dividend event.

So, should you buy before or after the ex-dividend date? I think it depends on three perspectives. First, look at how the stock price performs before the ex-dividend date. If the price has already risen to a high level, many investors might take profits early, especially those looking to avoid taxes. Entering at this point could carry the risk of a decline. Second, consider the historical trend. Generally, stocks tend to fall more easily after the ex-dividend date, which isn’t ideal for short-term traders. However, if the stock price drops to a technical support level and stabilizes, it could be a good buying opportunity. Lastly—and most importantly—look at the company’s fundamentals.

For companies with solid fundamentals and industry-leading positions, the ex-dividend adjustment is essentially a technical correction in the stock price, not a sign of value loss. In fact, it provides an opportunity to buy quality assets at a better price. Therefore, for such companies, buying after the ex-dividend date and holding long-term is often a more profitable strategy.

Another important concept is “fill-the-rights” and “stick-the-rights.” Fill-the-rights means that after the stock goes ex-dividend, the price gradually recovers to pre-dividend levels, indicating investor optimism about the company’s prospects. Stick-the-rights, on the other hand, refers to stocks that remain depressed without recovering, usually signaling investor concerns about the company’s outlook.

Specifically, suppose a stock is trading at $35 before the ex-dividend date, and on that day, it drops to $31. If it later recovers back to $35, that’s a fill-the-rights; if it doesn’t, that’s a stick-the-rights.

Ultimately, whether to buy before or after the ex-dividend date depends on your investment goals. If you’re a long-term holder seeking steady income from high-dividend stocks, you don’t need to worry too much about the short-term fluctuations around the ex-dividend date. But if you want to capitalize on short-term price swings around the ex-dividend event, you need to analyze stock trends and company fundamentals more carefully.

There’s also an implicit cost to consider: taxes. If you hold stocks in a regular taxable account, even though the stock price drops on the ex-dividend date, you still need to pay taxes on the received dividends. Plus, transaction fees and trading taxes can eat into your returns. For example, in Taiwan’s stock market, the transaction fee is 0.1425% of the stock price multiplied by a discount rate, and the trading tax is 0.3% for regular stocks and 0.1% for ETFs.

In the end, you should make rational decisions based on your investment objectives and risk tolerance. While the opportunities for gains from ex-dividend stocks do exist, it’s crucial to fully understand the associated risks and costs.