Here’s why the Wesfarmers (ASX:WES) share price is sinking today

Wesfarmers’ shares are under pressure on Wednesday…

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The Wesfarmers Ltd (ASX: WES) share price is falling on Wednesday.

In morning trade, the conglomerate’s shares are down 3% to $58.16.

Why is the Wesfarmers share price sinking?

The good news is that the weakness in the Wesfarmers share price today has nothing to do with its operational performance or a broker note.

Instead, the company’s shares are falling after trading ex-dividend this morning for its final dividend of FY 2021.

What dividend is Wesfarmers paying?

Last month Wesfarmers released its full year results and revealed a 10% increase in revenue to $33,941 million and a 16.2% lift in net profit after tax to $2,421 million.

This allowed the Wesfarmers Board to declare a fully franked final dividend of 90 cents per share, which took its full year dividend to 178 cents per share.

This morning Wesfarmers’ shares are trading ex-dividend for this final dividend. This means that new buyers of the company’s shares will not be entitled to the dividend when it is paid on 7 October. As a result, the Wesfarmers share price has dropped to reflect this.

But wait there’s more

Investors that hold onto their Wesfarmers shares can also look forward to a potential return of capital of 200 cents per share.

The Board-recommended distribution remains subject to shareholder approval at the 2021 Annual General Meeting on 21 October 2021. However, the market is expecting the vote to be a mere formality.

If all goes to plan, Wesfarmers intends to pay this capital return on 2 December.

What else is going ex-dividend?

Earlier this year rival Woolworths Group Ltd (ASX: WOW) completed the demerger of the Endeavour Group Ltd (ASX: EDV) business. This saw Woolies shareholders receive shares in the drinks business.

This morning the Endeavour share price is trading lower after it went ex-dividend as well. It is paying an inaugural final dividend of 7 cents per share to shareholders.

This means that investors that held onto their Endeavour shares following the demerger can look forward to receiving its dividend on 22 September.

Should you invest $1,000 in Wesfarmers right now?

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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