Entering the world of investing, one of the most popular goals for beginners is generating passive income through "dividend stocks." Early on, one of the first terms investors encounter and need to understand is "XD" (Excluding Dividend).
This mark indicates that if an investor buys the stock on the date the XD mark appears or afterward, they will not be entitled to the dividend for that period.
But should investors buy dividend stocks “before” or “after” the XD date? There is no fixed formula for this answer, as it depends on individual goals, holding periods, and strategies.
Thairath Money will delve into perspectives and strategies to clarify the advantages and disadvantages of buying before and after the XD date, helping you determine which approach best suits your investment style.
Buying stocks before the XD date means purchasing the stock at least one trading day before the stock exchange marks it as XD and holding the stock through the morning of that day. This ensures your name is recorded in the shareholder register and you qualify to receive the dividend for that period.
This strategy seems straightforward—buy and then simply wait to receive dividends—but in reality, there is a stock price mechanism to be aware of.
Securities company Bualuang Securities offers a "dividend stock buying method for beginners," noting that many investors buy dividend stocks 2-3 days before the dividend payment date, thinking that holding the stock briefly will quickly earn them dividends.
This is a major misconception because on the XD date, stock prices typically drop as the price adjusts by subtracting the dividend amount—unless the stock is fundamentally strong with value exceeding the dividend paid, in which case the post-XD price may not decline, effectively giving a "free dividend."
Moreover, if you are not seeking dividends but want to profit from price differences, statistics show it is better to buy in advance and sell before the XD date, since stocks are often speculated upward before XD and tend to drop sharply afterward. Selling before helps lock in profits from price fluctuations.
TISCO Bank stated in its article “Know Before Buying Dividend Stocks: Invest Wisely and Profit Mindfully” that buying dividend stocks about two months before the XD date often provides higher profit opportunities, with an average return of around 11.66%, as the market has yet to price in the dividend expectation and prices have not risen sharply.
Additionally, investors are advised to consider three main factors when screening dividend stocks:
Although buying stocks after the XD date is less commonly recommended because most investors focus on receiving upcoming dividends, in reality, this strategy exists and can be a "golden opportunity" to accumulate quality stocks.
Buying stocks after the XD date means purchasing from the day the stock is marked XD onward, officially "forgoing" the right to that dividend round in exchange for buying the stock at a lower price, as market mechanics typically cause the price to drop by about the dividend amount or more on that day.
DAO Securities (Thailand) noted in an analysis that for large dividend stocks whose prices have already risen significantly in response to dividend news, if investors missed early buying opportunities, the advice is to "wait and buy after XD or, if you want a long-term hold, buy now to lock in next year’s yield."
The rationale for waiting to buy after XD is evaluating value and finding a "safe entry point." Typically, the post-XD price drop can be estimated by:
“The price before XD minus the dividend amount.”
However, if the stock was heavily speculated and surged unusually high in advance, the price may fall back to the level before the run-up, which becomes the "safe buy point after XD."
The clearest advantage of buying after XD is acquiring shares at a lower, more reasonable cost, as speculative buying by short-term dividend seekers has already dissipated.
This strategy suits long-term investors who wish to gradually accumulate fundamentally strong stocks, hold firmly, and receive full returns and dividends in the next period without worrying about sharp price drops on XD day.
The downside is that you immediately miss out on the dividend for that round. Also, not all stocks that drop after XD are worth buying; if the company’s performance outlook is poor or the dividend came from one-time gains, the stock price may decline for a long time and take a while to recover.
Therefore, determining which approach is "most worthwhile" depends primarily on your investment plan and goals. Whether buying before or after XD, the key is the "company’s fundamental strength" or finding businesses capable of growth and generating cash flow to pay dividends sustainably over the long term.
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