Avocado Report

What is a Dividend and How Does It Impact Share Price? A dividend is a portion of a company’s earnings distributed to shareholders, typically in cash or additional shares. Companies that generate stable profits often pay dividends as a way to reward investors. Impact on Share Price When a company declares a dividend, the stock price typically drops by the dividend amount on the ex-dividend date. This happens because the cash paid out is no longer part of the company’s assets.  What is the Ex-Dividend Date? The ex-dividend date is the cutoff date set by the stock exchange that determines which shareholders are eligible to receive the declared dividend. If you buy the stock on or after the ex-dividend date, you won’t receive the upcoming dividend. Instead, the dividend is paid to the seller of the stock.  For example: If a stock is priced at $100 and declares a $5 dividend, its share price will likely adjust to $95 on the ex-dividend date. The investor’s total value remains the ...