The Macquarie Group Ltd (ASX: MQG) share price fell $1.93 or 1.4% to $135.81 this morning, but there's no need for shareholders to worry. The shares are down because Macquarie has gone without the rights to its $2.50 per share dividend that has 40% franking attached.
Generally on the day a stock goes 'ex-dividend" it'll fall around the amount of the dividend payment on top of any natural market swings.
This is especially true of popular blue-chip dividend shares like Macquarie, Telstra Corporation Ltd (ASX: TLS) or Westpac Banking Corp (ASX: WBC).
The price falls reflect the reality the shares are worth less as they're now without the rights to future cash flows. Blue-chip shares are generally valued on the net present value of future cash flows.
Often the stocks will fall greater than the dividend amounts as 'hot money' or 'dividend strippers' sell out in an attempt to make a quick profit.
However, if you hold shares for less than 45 days and are eligible for more than $5,000 in total franking credits you won't be able to claim the franking credits anyway under tax laws. This is because franking credits are designed to eliminate double taxation, but not to provide extra income to traders or speculators.
Westpac will go 'ex-dividend' tomorrow and National Australia Bank Ltd (ASX: NAB) on November 14.
