In morning trade the Harvey Norman Holdings Limited (ASX: HVN) share price is amongst the worst performers on the S&P/ASX 200 index.
At the time of writing the retailer's shares are trading 3% lower at $3.89.
Why is the retailer sinking lower?
The good news is that this decline has nothing to do with the way the company is performing or the release of a bearish broker note, but is entirely attributable to its shares trading ex-dividend this morning.
When a company's shares trade ex-dividend, it means that they are now trading without the rights to an upcoming dividend payment.
In light of this, potential buyers of its shares will adjust the buy price to reflect the fact that they will not be entitled to this dividend.
Harvey Norman shares have traded ex-dividend this morning for its fully franked interim 12 cents per share dividend, which equates to a yield of approximately 3% based on the last close price.
Eligible shareholders can now look forward to receiving this dividend in their nominated accounts on May 1.
Should you buy the dip?
Whilst I've been impressed with the performance of the Harvey Norman business in FY 2019, thanks largely to its international operations, I think its shares are fully valued now after a solid run.
For this reason I won't be making an investment and would sooner buy Accent Group Ltd (ASX: AX1) and Super Retail Group Ltd (ASX: SUL) shares instead.
However, one broker that still sees value in its shares is Deutsche Bank.
A note out of the investment bank last week reveals that its analysts have a buy rating and $4.70 price target on the retailer's shares.
The broker thinks that Harvey Norman's international businesses have a lot of promise and that expects them to contribute over 40% of retail earnings within the next five years.
