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How do dividends impact stock price? |
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First, dividends are averaged over the past two rounds.
Second, stockholders will ignore dividend amounts above either:
- This year's EPS, or
- Or if EPS is falling, the average EPS over the past two years
One other factor drives stock price — Book Value. If you pay out more than the EPS, it follows that book value must fall and with it the stock price.
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