Recently, many novice investors have been asking a question: Will the stock price rise before the ex-dividend date? Actually, this confusion is quite common because people often misunderstand the performance of dividend-paying stocks.

Let's start with the conclusion: a decline in stock price on the ex-dividend date is not an inevitable phenomenon. Many believe that stock prices must fall on the ex-dividend date, but based on historical data, that's not the case at all. Industry leaders like Coca-Cola and Apple often experience price increases on the ex-dividend date. For example, on a certain ex-dividend day last year, Apple's stock price rose from $182 to $186 the day before, a quite substantial increase.

Why does this happen? It's actually very simple. The theoretical basis for stock prices dropping on the ex-dividend date is that when a company pays out cash dividends, its assets decrease, so the stock price adjusts downward. But in reality, stock price movements are influenced by many factors, including market sentiment, company performance, and industry outlook. For a fundamentally solid company, will the stock price rise before the ex-dividend date? The answer is very likely, especially when the market is optimistic about the company's future development.

Let me give a specific example. Suppose a company's stock price is $35, which includes $5 of excess cash. The company decides to distribute a special dividend of $4. Theoretically, on the ex-dividend date, the stock price should drop to $31. But if the company's performance continues to improve and investors remain optimistic about its prospects, the stock price might gradually recover or even surpass $35—that's what we call "fill the rights issue." Conversely, if the stock price remains sluggish, it's called "sticking to the rights issue."

So, is it worthwhile to buy stocks after the ex-dividend date? It depends on several factors. First, look at the stock price performance before the ex-dividend date; if it has already risen to a high level, buying at that point might not be very wise. Second, observe the historical trend—some companies tend to decline after the ex-dividend date, but many others remain strong. Most importantly, consider the company's fundamentals. Industry leaders and companies with solid fundamentals might find the ex-dividend date a good opportunity to add positions because the intrinsic value hasn't changed; the stock price is just undergoing a technical adjustment.

Also, be aware of some hidden costs. If you buy dividend-paying stocks in a regular taxable account before the ex-dividend date and then experience a loss, you'll still need to pay taxes on the received dividends, which adds to the cost. Additionally, transaction fees in Taiwan's stock market (stock price multiplied by 0.1425% and then discounted) and trading taxes (0.3% for common stocks, 0.1% for ETFs) should also be factored in.

In summary, whether stock prices will rise before the ex-dividend date doesn't have an absolute answer; it depends on the company's quality and market sentiment. For fundamentally strong companies, the ex-dividend date might actually be a good long-term entry point. But if you're aiming to profit from short-term fluctuations, you'll need to pay more attention to technical analysis and market sentiment, and not be fooled by the superficial dividend yield.