Why the Carsales (ASX:CAR) share price is falling today

What’s sending the Carsales share price in negative territory?

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Key points

  • Carsales shares track 2.82% lower to $21.37 
  • The company's shares are trading ex-dividend 
  • Eligible shareholders will receive a dividend payment of 25.5 cents on 19 April 

The Carsales.com Ltd (ASX: CAR) share price is heading south during late Friday afternoon.

At the time of writing, the auto listings company’s shares are down 2.82% to $21.37.

Why are Carsales shares falling today? 

Following the company’s half year results released on 14 February, investors are eyeing Carsales shares as they go ex-dividend today.

Yesterday, Carsales shares rose by 4.61% as investors fought to lock in the company’s upcoming dividend.

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

What does this mean for Carsales shareholders?

For those eligible for Carsales’ interim dividend, shareholders will receive a payment of 25.5 cents per share on 19 April. The dividend is fully-franked, which means investors can expect to receive tax credits from this.

The latest dividend reflects an increase of 2% when compared against the prior corresponding period (25 cents per share).

It is also the biggest dividend that has been paid in the company’s history.

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 22 March to 28 March.

There is no DRP discount rate and the last election date for shareholders to opt-in is on 22 March.

Are Carsales shares a buy now?

Following the company’s financial scorecard, a couple of brokers weighed in on the Carsales share price.

The team at Jefferies raised its 12-month price target by 1.8% to $30.26 for the auto listings company’s shares. Its analysts believe that there is still more upside in Carsales shares in line with its sound performance recently.

Based on the current share price, this implies an upside of about 42% for investors.

Furthermore, Goldman Sachs also lifted its rating on Carsales shares by 3% to $23.80 a pop. This also implies an upside of around 11% from where the company trades today.

Carsales share price summary

Since the beginning of 2022, Carsales shares have lost 15% on the back of weakened investor sentiment. The S&P/ASX 200 Index (ASX: XJO) is also down around 2% over the same timeframe.

Carsales shares reached an all-time high of $26.67 in December, before backtracking amid inflationary movements and the cost of living.

Based on today’s price, Carsales commands a market capitalisation of roughly $6.04 billion and has a trailing dividend yield of 2.22%.

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 carsales.com 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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