It's been a pretty grim day for the S&P/ASX 200 Index (ASX: XJO) so far this Wednesday. Although the ASX 200 has recovered somewhat from the deep falls we saw this morning, the index still remains down by 0.1% at present. But the Woolworths Group Ltd (ASX: WOW) share price is faring worse.
The ASX 200 consumer staples share and supermarket giant closed at $36.63 a share yesterday. But today, Woolworths is going for $36.40 at the time of writing, down 0.64% on yesterday's close.
So why are Woolies shares underperforming the market today?
Well, it does seem strange what is happening to Woolies shares today. However, there is a perfectly rational explanation for this share price fall, which is one of the best reasons to have a share go down in value. Woolworths has just traded ex-dividend for its upcoming final dividend payment.
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Woolworths share price prepares to pay out latest dividend
When the grocer dropped its FY22 earnings last week, Woolworths declared a final dividend of 53 cents per share, fully franked. That came in above the last payment shareholders received – the interim dividend of 39 cents per share from April. But it also represented a slight 3.64% drop from FY21's final dividend of 55 cents per share.
But, as we warned investors yesterday, if this dividend was to be received by an investor, they needed to own Woolworths shares before today, the ex-dividend date. Any new shareholders from this session onwards will not be eligible.
When an ASX share trades ex-dividend, it usually results in a share price fall. That's because the value of this dividend for new investors has left the company's share price. So that explains why the Woolworths share price is under pressure today.
Investors can now look forward to receiving Woolworths' 53 cents per share final dividend on 27 September next month. But investors have until this Friday to decide if they wish to receive the dividend in cash, or participate in Woolworths' dividend reinvestment plan (DRP) and receive new shares instead.
At the current Woolworths share price, this ASX 200 supermarket operator has a dividend yield of 2.52%.
