Here’s why the Nufarm (ASX:NUF) share price is falling today

Shares in the crop protection and specialist seeds company are edging lower. Here are the details

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The Nufarm Ltd (ASX: NUF) share price is edging lower on Thursday morning. This comes as shares in the agricultural chemicals company are trading ex-dividend.

At the time of writing, Nufarm shares are down 1.36% to $4.70. It’s worth noting that despite shedding today, its shares have pushed around 4% higher in the past month.

Why are Nufarm shares falling today? 

With the company’s full-year results released last week, investors are eyeing Nufarm shares as they go ex-dividend today.

Typically, one business day before the record date — the ex-dividend date — is when investors must have purchased shares. If the investor does not buy Nufarm shares before this date, the dividend will go to the seller.

Historically, when a company reaches its ex-dividend day, its shares tend to fall in proportion to the dividend paid out. This is because investors tend to sell off the company’s shares after securing the dividend and could be a reason why the Nufarm share price is edging lower today.

What does this mean for Nufarm shareholders?

For those eligible for Nufarm’s final dividend, shareholders will receive a payment of 4 cents per share on 17 December. The dividend is not franked, which means investors will miss on the imputed tax credits from this.

The dividend reinvestment plan (DRP) will be made available to shareholders for the final dividend. The issue price will be calculated on the volume-weighted average price over the 10-day period commencing on 22 November. To opt in, the last election date in the DRP is on Monday 29 November.

This is the first time Nufarm has paid a dividend since 2018. The board previously declared a final dividend of 6 cents per share. Together, with its interim dividend of 5 cents apiece, this translated to a full-year dividend of 11 cents for 2018.

The company went through a tough time over the last few years, impacted by supply chain headwinds and weak agriculture conditions. Reduced earnings in Europe, its seed technologies business, and North America offset growth in Australia and New Zealand, and Asia.

Nonetheless, management turned the company around, focusing on improving revenues, margins, and cash generation. Improved seasonal conditions, soft commodity prices, and a tight supply drove a significant uplift in earnings.

About the Nufarm share price

Over the last 12 months, the Nufarm share price has gained around 10%, with year-to-date up around 14%. The company’s share price reached a 52-week high of $5.60 in April, before treading lower.

Nufarm has a market capitalisation of roughly $1.7 billion, with approximately 379 million shares on its books.

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Motley Fool contributor Aaron Teboneras 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 has no position in any of the stocks mentioned. 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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