Here’s why the Treasury Wine (ASX:TWE) share price is sliding today

What’s up with Treasury Wine shares mid-week?

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Key points

  • Treasury Wine shares drop 2.10% to $11.415 
  • The company's shares have backtracked due to trading ex-dividend today 
  • Investors who owned Treasury Wine by market close yesterday will receive a dividend payment of 15 cents on 1 April 

The Treasury Wine Estates Ltd (ASX: TWE) share price rocketed higher since announcing its FY22 half-year results two weeks ago.

While the wine giant delivered a drop in earnings, investors looked past this and focused on the future. This led to the company’s share price advancing by more than 8% since 16 February.

However, Treasury Wine shares have edged lower today, down 2.10% to $11.415.

Here’s what is dragging the share price down on Wednesday.

Treasury Wine shares trade ex-divided

With the company’s half year results delivered, investors are eyeing Treasury Wine shares as they go ex-dividend today.

According to the half-year report, Treasury Wine produced a softened performance across key metrics.

In summary, net sales declined by 10.1% to $1,267 million over the previous corresponding period. 

The company’s Penfolds business felt impacted by reduced shipments to mainland China. However, this was partly offset by the strong growth achieved through global priority markets and channels.

As a result, net sales revenue per case increased by 16% to $95.60.

On Treasury Wine’s bottom line, net profit after tax (NPAT) fell 7.5% to $109.1 million.

The board maintained a fully-franked interim dividend of 15 cents per share.

Management noted that the latest dividend equates to a payout ratio of 66% of NPAT.

The company’s dividend policy is to distribute between 55% to 70% of normalised net profit after tax each year.

It is worth noting that there is a capital management program that has been active since FY18. This returns excess capital efficiently through an on-market share buyback.

When can Treasury Wine shareholders expect payment?

Treasury Wine will pay the interim dividend to eligible shareholders approximately 4 weeks away on 1 April. The dividend is fully-franked, which means investors can expect to receive tax credits from this.

Investors who elect for the dividend reinvestment plan (DRP) will see a number of shares added to their portfolio. This will be based on a volume-weighted average price from 7 March to 18 March.

There is no DRP discount rate and the last election date for shareholders to opt-in is on 4 March.

Based on today’s price, Treasury Wine commands a market capitalisation of roughly $8.25 billion and has a trailing dividend yield of 2.45%.

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 recommended Treasury Wine Estates 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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