Recently, many people have been discussing high-dividend stocks, especially the buy and sell strategies around the ex-dividend date. To be honest, many people's understanding of this issue is not yet deep enough.

Let's start with a core misconception—does the stock price definitely fall on the ex-dividend date? Actually, not necessarily. Although theoretically, the stock price should adjust downward due to cash outflow on the ex-dividend date, historical performance shows that the stock price often does not necessarily decline before the ex-dividend date. Stable dividend-paying blue-chip stocks like Coca-Cola and Apple often experience an increase on the ex-dividend date itself. For example, on November 10, 2023, Apple's stock price rose from $182 to $186 on the ex-dividend date, an increase of nearly 2.2%. This indicates that market sentiment, company performance, industry heat, and other factors all influence stock price performance.

Understanding the logic behind ex-dividends is quite simple. Suppose a company's stock price is $35, which includes $5 of idle cash. The company decides to distribute a special dividend of $4. Theoretically, the stock price should adjust to $31 on the ex-dividend date. But in reality, if investors are optimistic about the company's prospects, the stock price may gradually recover, a phenomenon known as "price recovery" or "fill-in." Conversely, if the stock price remains sluggish without recovery, it is called "discounted price," often reflecting investors' concerns about the company's future.

So, is it worthwhile to buy stocks after the ex-dividend date? My observation is that it depends on three factors. First, whether the stock price was already high before the ex-dividend date. If the price had already risen significantly, many investors might take profits early, and entering at this point could face substantial selling pressure. Second, look at the historical trend. Statistically, stock prices tend to decline more in the short term after the ex-dividend date, which is less friendly to short-term traders. However, if the price drops to a technical support level and shows signs of stabilization, it could be a good buying opportunity.

Most importantly, focus on the company's fundamentals. For industry leaders with solid fundamentals, the ex-dividend adjustment is more of a technical correction and does not imply a loss of value. On the contrary, the post-ex-dividend price correction might offer long-term investors a more favorable entry point. Buying and holding long-term at this time can often be more profitable because the company's intrinsic value remains unchanged by the dividend distribution.

However, participating in ex-dividend stocks also involves hidden costs. If using a regular taxable account, dividends received on the ex-dividend date are taxable, and you also bear unrealized losses from the stock price decline before the ex-dividend date. Additionally, in the Taiwan stock market, transaction fees are calculated as stock price times 0.1425% times the discount rate (usually 50-60%), and a 0.3% transaction tax applies when selling. These costs can eat into your returns.

In summary, ex-dividend stocks are suitable for patient long-term investors. Rather than obsessing over short-term fluctuations, it’s better to choose fundamentally solid companies, buy at the right price, and hold, allowing compound interest and stable dividends to gradually build wealth. This is the correct approach to high-dividend investing.