1 min readApr 19, 2020
The notion that dividends are free money, or anything like it, is a fallacy.
Where you say, “As long as Apple stock price doesn’t deviate too much, you will get paid around $3 per share just for owning the stock,” you identify the crux of that fallacy.
If no other news drives the price higher (or lower), Apple’s stock price will decline by exactly the amount paid out as dividends. That’s because when a company (Apple or any other) pays out dividends, it reduces the cash that company has on hand, which reduces the value of the company.
However this doesn’t necessarily mean investing in dividend-paying stocks is purely a bad idea, as I explore here:
