It's been a bumpy day for the S&P/ASX 200 Index (ASX: XJO) so far this Thursday. After opening sharply lower this morning, the ASX 200 rebounded into positive territory but has since slipped back into the red, currently down by 0.02%. But let's talk about the South32 Ltd (ASX: S32) share price.
This ASX 200 resources share is getting hammered today. South32 closed at $4.53 a share yesterday, but opened at $4.50 a share this morning and is trading at $4.46 at the time of writing, down a seemingly nasty 1.55%.
So what's going on with South32 shares today that would explain this pointed market underperformance?
Well, this loss is due to what is a pretty good reason to have your shares fall in value. South32 has just traded ex-dividend for its next shareholder payment.
South32 share price slides after trading ex-dividend
When an ASX share declares a dividend payment, it must also nominate an ex-dividend date. This forms a wall between shareholders, cutting off new investors from receiving this dividend.
Put simply, anyone who owned South32 shares as of yesterday's close is eligible to receive South32's next dividend payment. Anyone who buys South32 shares from today onwards, taking advantage of this lower share price, is not eligible.
This is why we typically see a fall in a company's share price when a company trades ex-dividend – it reflects this inherent loss of value.
So in South32's case, this mining giant announced a 4.9 US cents per share interim dividend last month when South32 revealed its latest half-yearly earnings report. As we covered at the time, these earnings saw the company report an 8% drop in revenues, as well as a 34% slump in profits after tax and a 33% fall in earnings per share (EPS).
As a consequence, South32's interim dividend of 4.9 US cents, fully franked, is a 43.8% drop from the interim dividend of 8.7 US cents that we saw get paid out last year.
Still, investors can look forward to receiving this dividend payment on 6 April next month. But we'll only find out on 16 March what the exact amount that investors will be receiving is in Australian dollar terms. On today's exchange rates, South32's dividend would be worth approximately 7.4 cents per share.
The company now has a dividend yield of 6.49% at the current South32 share price.
Despite the red numbers in South32's latest earnings, the company's shares are still up a healthy 12.7% in 2023 year to date:
