I've invested for many years, so I'm not some newbie. I'm reading a lot of things about dividends saying when the company pays out a $1 dividend, the stock price will go down by $1 on the pay out day.
However, how can that be? The $1 dividend doesn't come from the stock's price, it comes from the company's cash. Does the company add the $1 to the stock price, then remove it after the payout date? I'm just confused by people saying the stock price goes down by $1, when I thought stock prices have nothing to do with a company's cash on hand that's being used for dividends.