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Why do people always talk about stocks that pay high dividends?
Isn't it true that on the ex-dividend date, the price of the stock goes down roughly the amount of the dividend? That is, what you gain in dividend, you lose in price drop. Yes and No. It Depends! Generally stocks move up and down during the market, and become more volatile on some news. So One can't truly measure if the stock has gone down by the extent of dividend as one cannot isolate other factors for what is a normal share movement. There are time when the prices infact moves up. Now would it have moved more if there was no dividend is speculative. Secondly the dividends are very small percentage compared to the shares trading price. Generally even if 100% dividend are announced, they are on the share capital. On share prices dividends would be less than 1%. Hence it becomes more difficult to measure the movement of stock. Note if the dividend is greater than a said percentage, there are rules that give guidelines to factor this in options and other area etc. Lets not mix these exceptions. Why is everyone making a big deal out of the amount that companies pay in dividends then? Why do some people call themselves "dividend investors"? It doesn't seem to make much sense. There are some set of investors who are passive. i.e. they want to invest in good stock, but don't want to sell it; i.e. more like keep it for long time. At the same time they want some cash potentially to spend; similar to interest received on Bank Deposits. This class of share holders, it makes sense to invest into companies that give dividends, as year on year they keep receiving some money. If they on the other hand has invested into a company that does not give dividends, they would have to sell some units to get the same money back. This is the catch. They have to sell in whole units, there is brokerage, fees, etc, there are tax events. Some countries have taxes that are more friendly to dividends than capital gains. Thus its an individual choice whether to invest into companies that give good dividends or into companies that don't give dividends.  Giving or not giving dividends does not make a company good or bad.