Recently, many people have been discussing high-dividend stocks, especially whether to buy in before or after the ex-dividend date. Actually, this issue is more complicated than it seems because stock prices typically drop on the ex-dividend date, but that's not always the case.

Let's first explain why this happens. When a company announces a dividend, theoretically, the stock price should decrease because the company's assets have reduced. For example, suppose a company's stock is priced at $35, including $5 in idle cash. If the company decides to pay out $4 in cash dividends, then the theoretical stock price on the ex-dividend date should be $31. Sounds reasonable, right? But in reality, it's often more complex.

I've noticed that leading stocks like Coca-Cola and Apple often actually rise on the ex-dividend date. Apple, for instance, rose more than 6% on last year's May ex-dividend day. This is because stock prices are influenced not just by dividends; market sentiment, company performance, and the overall economic environment also play roles. Companies like Walmart and Johnson & Johnson, which have stable dividends, also often see their stock prices increase on the ex-dividend date. So, a price drop on the ex-dividend date is not an absolute rule.

So, is it worthwhile to buy stocks after the ex-dividend date? That depends on whether the stock "fills the gap." If the stock price gradually recovers after the dividend, even returning to pre-dividend levels, that's called "filling the gap," indicating investors are optimistic about the company's prospects. Conversely, if the price doesn't recover, it's a failed fill, often called "discounted rights issue" in the market, usually signaling investor concerns about the company's future performance.

When deciding whether to buy around the ex-dividend date, I think three factors should be considered. First, look at the stock's performance before the ex-dividend date. If it has already risen to a high level, many investors might take profits early, making entry riskier. Second, review historical trends: stocks tend to decline rather than rise after the ex-dividend date, which isn't friendly to short-term traders. But if the price drops to a technical support level and stabilizes, that could be a good buying opportunity.

Most importantly, focus on the company's fundamentals. For stable, industry-leading companies, the ex-dividend adjustment is just part of the price correction and doesn't mean a loss of value. In fact, it could be an opportunity to buy quality assets at a lower price. In such cases, buying after the ex-dividend date and holding long-term is often more profitable because the intrinsic value of the company hasn't changed.

There's also an invisible cost to watch out for—taxes. If you hold stocks in a regular taxable account, dividends are taxed, and you might face unrealized capital losses. In Taiwan's stock market, you also need to consider transaction fees and trading taxes, which add to the costs.

Honestly, for those looking to capitalize on short-term fluctuations around the ex-dividend date, simply holding stocks to receive dividends might not be the most efficient approach. Some investors consider using derivatives like contracts for difference (CFDs) to participate in price movements, requiring only a small margin to control larger positions, and avoiding dividend tax since they don't actually hold the stock. This method can offer higher potential returns but also involves risk, so it should be aligned with your risk tolerance.

In summary, whether to buy stocks around the ex-dividend date depends on many factors. You shouldn't judge solely based on a price drop. If you're optimistic about the company's long-term prospects, the post-dividend pullback might actually be an opportunity. But if you're aiming for short-term gains, you need to be more cautious about the risk of fill failure and transaction costs.