Further to this, I have strong preference for firms which re-invest their cash flow resulting in capital gains which is much more tax efficient than a dividend.
I would agree with you that div stocks are more expensive on a Price-to-Earnings basis. Check this comparison: https://pages.etflogic.io/?compare=DVY|SPY|XLU
High yield (3%+) div ETFs like DVY and XLU are trading near 25 P/Es whereas the S&P is closer to at 22 PE yielding just above 1%.
As interest rates tick down people look for income/yield. So high div stocks get bid up because of this
Stock splits are famously positive alpha events. The mere fact that a stock has now become more "affordable" because of a lower per share price causes people to buy it. But I don't think any professional investor in their right mind would trade such a strategy.
The pre ex date div strategy you suggest may be more relevant because there's a higher frequency of events. The effect may be more pronounced in more "retail" investor focused names. I wouldn't trade it in its own. But maybe group it together with a suite of other signals in a stat arb like strategy.
Of course, my portfolio is more than just dividend stocks, but it’s a good passive income source.
This is absolutely not true, there's plenty of stocks around here with low P/E ratio and dividends. You just have to look outside of tech to find them.
The main issue I have with a dividend paying stock is that they pay corporation tax and then I pay income tax on the dividend....with a group which re-invest its earnings, I do not pay income tax on that and if I need cash, I can sell stock and pay capital gains tax at a lower rate.
The main issue with dividend stocks is that when the dividend gets cut there's forced seller by the dividend ETFs and stared retail investors so the drop in share price gets exacerbated which is unfortunate.