Should I buy stocks just for dividends?

Buying shares before and after the dividend distribution - a comparison

The dividend payment is of course also part of the return on investments in stocks.

Every shareholder who owns shares on the day of the Annual General Meeting has a right to the latter; no matter how long he has owned the shares.

This dividend distribution is the portion of the company's profits that is distributed to shareholders.

But is it therefore worth buying a share shortly before the dividend is paid out and then selling it again immediately afterwards? - Not necessarily.

Transaction costs and impending price loss

On the one hand, as an investor, you first pay transaction costs such as brokerage commission and fees for the respective trading system of the stock exchange when buying shares. In addition, the buying and selling fees of your custodian bank are usually the largest item.

On the other hand, after the dividend has been paid, the share price generally initially falls by exactly the amount of the dividend payment. This is economically very understandable: the payout reduces the company's assets, converted per share by exactly the amount of the dividend. So it's a zero-sum game.

The price expires around the dividend

The management board will propose the amount of the dividend after the annual report has been completed and submitted. The general meeting, which usually takes place between March and June, has to approve this proposal.

All price movements going beyond this have nothing to do with the dividend itself, but solely with general market conditions (friendly or weak stock market) and of course with news from the company itself.

Of course, the general meeting of a stock corporation is always a prominent forum that is reported accordingly in the media. The board of directors will therefore always try to get “good press” as far as possible within the given circumstances. Therefore, the price trend is usually rather positive in the course of the general meetings.

More on this:Dividend payments: Profit as an investor - that's how it works

Share purchase and dividend distribution: There is also the withholding tax

Investors have to pay a flat tax of 25 percent on dividends. However, this only applies if the saver lump sum of 801 euros is exceeded.

In the case of domestic custody accounts, the bank pays the tax directly and the dividend no longer appears on the tax return.

Dividends from foreign custody accounts must be reported separately to the tax office.

As a share owner, you ultimately don't care whether you are taxed through a dividend payment or, if the share is sold, through a slightly higher price gain. Basically, your load remains the same. But there is one exception:

Certain companies pay dividends that are (partially) tax-free for accounting reasons. These include, for example, Deutsche Post and the real estate group Deutsche Wohnen. In such a case, you may be able to realize a small tax advantage.

A purchase is more worthwhile after the dividend payment

If the bank or broker calculates the commission as a percentage of the current price, it is therefore usually more worthwhile to buy shares after the dividend has been paid out. After all, the prices are then lower.

For long-term investors, the dividend-related price decline is less of a concern, as it can even out in the medium term.

However, this is not guaranteed. The price ultimately depends on general market developments and of course company news.


There is no general answer to the question of the best time to buy. The general market situation on the capital markets and in particular the current company situation are always decisive for the course of the share price.

Hence our tip: do not make the time of buying or selling a share dependent on the date of a dividend payment.

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