This morning the Wesfarmers Ltd (ASX: WES) share price is likely to fall ~6% when the market opens.
But don't worry, nothing bad has happened to the company or its brands. The reason its shares are likely to sink notably lower on Tuesday is because they will trade ex-dividend this morning for the conglomerate's interim and special dividends.
When the company released its half year results earlier this month, the Wesfarmers board declared a fully franked $1.00 per share interim dividend and a fully franked $1.00 per share special dividend.
The board decided on the latter following the successful completion of actions taken to reposition its portfolio.
This included the demerger of the Coles Group Ltd (ASX: COL) business, the sale of its share of the Bengalla thermal coal mine project to New Hope Corporation Limited (ASX: NHC), the sale of the Kmart Tyre and Auto Service business to Continental AG, and the sale of its stake in Quadrant Energy to Santos Ltd (ASX: STO).
These dividends will now be paid to eligible shareholders in around six weeks on April 10.
Should you buy the dip?
Buying Wesfarmers shares today means that you won't be eligible the dividends and the fully franked 5.7% yield that they offer.
So if you're on the lookout for income in the near term, you might be better off looking elsewhere as it won't be until late this year that Wesfarmers' next dividend will be paid to shareholders.
But if you're happy to be patient and looking for a quality company to add to your portfolio, then I think it could be worth picking up Wesfarmers shares today.
This is because I believe Wesfarmers is a stronger company after its portfolio restructure and is well-positioned for earnings and dividend growth over the coming years. In addition to this, its shares are trading at a significant discount to rival Woolworths Group Ltd (ASX: WOW), making it my preferred pick of the two.
