Because the buyer no longer receives the upcoming dividend. That cash is leaving the company, so the shares open lower by approximately the dividend amount. Nothing has gone wrong — the value moved from the share to the payment.
Declaration is when the company announces the dividend. Ex-dividend is the first day shares trade without the right to it. Record is when the company checks who holds shares. Payment is when the cash arrives.
The one that matters for the price is the ex-dividend date.
Before that date, buying the share includes an entitlement to the coming payment. On it, that entitlement is gone, and the price reflects the difference.
A company paying a $1 dividend will typically see its shares open about $1 lower. You have not lost anything if you held through — you receive that dollar.
Dividend yield is the annual dividend divided by the share price. A rising yield can mean the dividend was raised, or that the price fell.
A yield that looks unusually high is often the second case, and can be a signal that the market doubts the dividend can be sustained.
They are declared at the board's discretion each period, not contractually owed. Companies reduce or suspend them when cash is short.
A long record of increases is a signal of intent, not a promise.
One question, no account: what did you come here for, and did you find it? A person reads these, and they shape what gets written next.
From StockMotive — the honest why behind every market move. Educational information only, not investment advice.