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Why the Genwoth Mortgage Insurance share price fell 13% today

The Genworth Mortgage Insurance Australia (ASX: GMA) share price has fallen 13.68% today after going ex-dividend overnight. No other major news regarding the company has been released today, but investors have bailed out after securing the 30.9 cents per share (cps) distribution.

GMA shares ended yesterday swapping hands for $3.29, but GMA opened at $2.94 this morning (a dip of 10.6%) and have traded lower throughout the day to close at $2.84.

How much is Genworth paying out?

The 30.9 cents per share dividend is made up of a 9cps ordinary final dividend (which is fully franked) and a 21.9 cps special dividend (not franked). This would give an annualised yield of 12.1% for Genworth (on yesterday’s final price) if you throw in the interim dividend of 9cps that was paid out in March.

Whether or not this higher yield is here to stay is not clear yet. Genworth’s dividend has tracked lower over the last few years – GMA shares paid out 28 cps in 2017, 24 cps last year and 18 cps this year if you exclude the special dividend.

The Genworth share price has been trending upwards in 2019 so far, having started the year at $2.14. GMA shares price got a 15% boost following its earnings report for 1H19 released on July 31, in which it reported an $88.1 million net profit – more than double what the company reported for the same period last year.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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