The S&P/ASX 200 Index (ASX: XJO) share Elders Ltd (ASX: ELD) has seen one of its directors increase his position in the business just before the stock goes ex-dividend. This could be seen as a positive sign.
Elders is a business that works with primary producers to provide products, marketing, specialist technical advice, and financial products. It also acts as a rural and residential property agency and management network.
Let's check the details of the company chair's share purchase.
Image source: Getty Images
Director buying
There's typically one main reason a director might decide to invest in their own business through an on-market trade – they think it's good value and the business has a positive future.
Chair Ian Wilton decided to buy a total of 15,000 Elders more shares in his superannuation fund for a total cost of $103,350. This means the average price paid was $6.89, slightly lower than where the ASX 200 share is trading now.
After this investment, Wilton's total holding had increased to 146,442 Elders shares, so he has a substantial amount of money invested in the agribusiness.
Elders shares' ex-dividend date
A week ago, the business reported its FY23 half-year result which showed sales had grown 9% to $1.66 billion, but underlying earnings before interest and tax (EBIT) had dropped by 38% to $82.8 million. Statutory net profit after tax (NPAT) had also shrunk 47% to $48.8 million.
The company said there had been a volatile agricultural industry backdrop, impacted by "softened livestock trading conditions, weaker crop input prices and unseasonably wet weather".
The board of Elders decided to declare an interim dividend per share of 23 cents, an 18% drop compared to the prior corresponding period.
The ex-dividend date tells potential investors when they will no longer be entitled to the dividend if they were to buy shares.
Elders' ex-dividend date for the upcoming dividend is 23 May, tomorrow. So today is the last day for investors to grab Elders shares and gain entitlement.
Investors will only need to wait a month before they receive payment. Dividends are due to be paid on 22 June 2023.
Outlook for the ASX 200 stock
Elders said demand for agricultural commodities is "anticipated to support favourable trading conditions in the second half of FY23".
The outlook for its rural products is "encouraging", the company said, and the outlook for its agency services is forecast to "improve in the second half but overall remain below FY22 levels". Cattle prices are also expected to remain subdued due to volume growth.
In real estate, softer broadacre market conditions are expected to persist for the foreseeable future. However, the "strong performance" of the financial services business is expected to continue into the second half of FY23.
