The Fortescue Metals Group Limited (ASX: FMG) share price has started the week deep in the red.
In early afternoon trade, the iron ore giant's shares are down almost 5% to $17.72.
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Why is the Fortescue share price falling today?
The good news for shareholders is that the weakness in the Fortescue share price today has nothing to do with the iron ore price or concerns over its Fortescue Future Industries (FFI) business.
Rather, this weakness has been caused by the company's shares trading ex-dividend this morning for its latest dividend.
When a share trades ex-dividend, it means that the rights to an upcoming dividend payment stay with the seller of shares and don't transfer to the buyer. As a result, a share price will more often than not drop in line with the dividend to reflect this. After all, you wouldn't want to pay for something that you won't receive.
The Fortescue dividend
Earlier this month when Fortescue released its half year results, the company reported a 28% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to US$4,762 million and a 32% reduction in underlying net profit after tax to US$2,779 million.
This, combined with a lowered payout ratio, led to the Fortescue Board declaring a fully franked interim dividend of 86 cents per share, down 41% on last year's interim dividend.
This compares to an 88 cents per share decline in the Fortescue share price today. Which means that if you take the dividend out of the equation, the company's shares are actually trading largely flat.
What's next?
Eligible shareholders can now look forward to receiving this 86 cents per share dividend in their bank accounts next month.
Fortescue is scheduled to make its payment on 30 March.
