Some basic facts: If a stock pay a dividend the price drops by that amount on that day. To find out when a stock payed a dividend, obviously look at the chart.... Oh wait, you can't see where it took place? Funny since the stock drops, you'd think you see that, except Mr Market tends to not have a straight value on any single day, so while you can make charts that show that hey, if the dividend hadn't been payed the stock would have gone up another 300%, the truth of the matter is, it might be the same price as it is today. Why, cause Mr Market is a honey badger and don't give a dam!
The same forces that move prices up and down all day still act upon the shares at the same time the price drops from going ex-dividend.
In other words, the noise is overwhelming the signal. If you average enough stock prices around the dividend date, the signal would become apparent at some point.
...otherwise, there would be an unexploited arbitrage opportunity to take on leverage and trade shares or options around the ex-dividend date and capitalize on the inevitable price movement. Similaly, there is no special opportunity to do the reverse of this trade and buy stocks on their ex dividend date, collect the dividend, and exit the position the next day, rotating from stock to stock each day/week to collect as many dividends as possible with a limited amount of funds. Each of these trading strategies would yield something less than buy and hold over the long term. The first strategy would miss dividends plus capital gains during its days out of the market. The second would miss capital gains during its days out of the market. Do some spreadsheet analysis on a 10-20y timeframe if you doubt this.
The fact that there is no such consistent opportunity suggests that markets are efficient and traders are using discounted cash flow analysis on expected earnings over a long timeframe to set the prices they are willing to pay. If you were doing DCF on a spreadsheet, the completion of a quarterly earnings period, which includes any dividend paid out of retained earnings, would both remove one cash flow from your spreadsheet and add another further out cash flow. I.e. You would simultaneously remove last quarter's earnings and add the following quarter 10 years from now, so that you are still analyzing the same duration of time. Also, the amount of discount applied to each future earning flow on your spreadsheet is reduced as time passes and each future earnings flow gets closer. The addition of future cash flows and the steady adjustment of discounts offsets the steady removal of earnings as they happen.
TLDR: If you consider this explanation TLDR or unconvincing, try day trading around ex-dividend dates. I suggest NLY which yields 12% so it must be a good deal. Probably no one has thought of this and NLY is such a bargain (12% = ROI!) because nobody noticed. ;)
So first off, there IS a strategy to capture dividends on the ex-div day and sell the next. It is a thing and apparently some people make a profit that way. It is not a thing I do or recommend due to the inherent volatility and high taxes that are involved. Your welcome to try your luck on NLY though!
As for your next part, you are proving my point, with this.... Thanks. BUT this also this made me take a step back and realize I do need to restate 1 part, not because it's wrong, but the way it's stated is poorly done, and that was this part (Hopefully I can be clearer if not.... I tired? ):
So while you can make charts that show that hey, if the dividend hadn't been payed the stock would have gone up another 300%, the truth of the matter is, it might be the same price as it is today.
I absolutely think that those particular "stock would have gone up _______%" charts are crap, and INCORRECT. As stated, market is efficient, the dividend is accounted for, before the mandatory price drop. Yes, it's NOT an optional price drop. It happens every time and it's not resetting value, not now valuing the company less, or anything else, that value has already been figured by the time the ex-div rolls around by those buying the stock. The only exceptions MIGHT be if they announcement day and the ex-div day are next to each other (ie I announce at 4pm or after for ex-div next day and yes that happens.)
I WILL say that at some point in the past not sure exactly when, that DID have an impact and WAS useful. Now, no so much, it's something that needs to go away. (rambling slightly, trying to get off the soap box)
Anyway, the value however that was determined is where the stock begins trading (or trading around due to volatility), and sure, it's value is determined to have dropped, but to phrase it in the most ridiculous way possible: What Would The Company Do With It?
Your answer, reinvest it in another business. Like Verizon investing in Yahoo..... (It's a mess by the way)
Or ATT investing in Direct TV (crash and burn anyone)
or... I could continue with other bad business choices, but I don't think I need to. I'll admit right now, all the companies I am mentioning are Dividend companies BUT that's what I know, so I am using what I know, and I know they are JUST like any other company that doesn't pay a dividend. If they make a bad business decision, value goes down, end of story.
My point, IS that the dividend is NOT the factor that will drive the value down or the factor that will drive it up, as we cannot say that just because a business is reinvesting it's cash in itself does not automatically equal a greater valued company. So saying if they had kept the cash or reinvested it in themselves does not mean the price will go up. In could in fact tank. So don't assume that if a company didn't pay a dividend that automatically means it's giving away value. It might very well be earning value just by doing so. (ie NOT buying bad idea inc. and killing your company in the process.)
Of course we could look at Apple (Extreme cash hording). Tons of cash sitting there. Tons of value. And the cash is doing..... nothing? How many of people think that is a good idea??? (If you raise your hand I WILL knock you on the head with a paper airplane!) (Granted they now HAVE a dividend but that's not the point!)
Either way, dividends matter. The value of the company can literally depend
As a side note from me, not trying to convince anyone to invest in single stocks OR dividend paying ETFs. If you have a strategy that is working for you, stick to it and for this board that is mostly ETFs.