Why is the Magellan share price sinking 8% today?

This fund manager's shares are sinking today. But why?

| More on:
A man slumps crankily over his morning coffee as it pours with rain outside.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Magellan Financial Group Ltd (ASX: MFG) share price is having a tough time on Wednesday.

In morning trade, the fund manager's shares are down almost 8% to $9.73.

Why is the Magellan share price sinking today?

The good news for shareholders is that this decline has nothing to do with another funds under management decline or a broker downgrade.

Instead, it could be argued that this decline is actually good news for shareholders.

That's because the pullback in the Magellan share price has been driven by its shares trading ex-dividend this morning for the company's next dividend payment.

When a share trades ex-dividend, it means the rights to an upcoming dividend payment have been settled. As a result, anyone buying its shares today will not be entitled to receive this payout when it is paid.

Understandably, investors don't want to pay for something they won't receive. So, a share price will tend to fall in line with the dividend to reflect this on the ex-dividend date.

The Magellan dividend

In case you missed it, last week Magellan released its FY 2023 results.

And while the result itself was very poor, with its earnings more than halving, the company declared a juicy dividend that got investors excited.

Magellan is paying a final dividend of 35.6 cents per share, a performance fee dividend of 4.2 cents per share, and a special dividend of 30 cents per share.

This is a total of 69.8 cents per share that will now be heading to eligible shareholders next month on 7 September.

Based on the Magellan share price at the close of play yesterday of $10.55, this equates to a very attractive 6.6% dividend yield.

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A woman in hammock with headphones on enjoying life which symbolises passive income.
Dividend Investing

Invest $20,000 in ANZ shares and get $1,200 in passive income

Can investors rely on ANZ for a 6% yield in their cash?

Read more »

Senior man wearing glasses and a leather jacket works on his laptop in a cafe.
Dividend Investing

Why your retirement income may take a hit — and what to do about it

Lower dividend payments doesn’t need to mean disaster.

Read more »

Australian dollar notes inside the pocket on jeans, symbolising dividends.
Dividend Investing

3 ASX dividend shares to buy with 5% to 7% yields

Analysts expect big yields from these buy-rated shares.

Read more »

Two excited woman pointing out a bargain opportunity on a laptop.
Dividend Investing

With 8%+ dividends, how long can these ASX 200 passive income shares stay cheap?

I think ASX 200 investors looking for ‘cheap’ passive income shares will want to check these out.

Read more »

A smiling woman puts fuel into her car at a petrol pump.
Dividend Investing

Where I'd invest $5,000 in ASX shares now for $1,000 of dividend income

The ASX offers a rich hunting ground for dividend income.

Read more »

a woman holds a facebook like thumbs up sign high above her head. She has a very happy smile on her face.
Dividend Investing

Bell Potter names the best ASX 300 dividend shares to buy

The broker has good things to say about these shares.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Buy these ASX dividend stocks for passive income

Analysts expect attractive dividend yields from these shares.

Read more »

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Dividend Investing

Goldman Sachs names 3 super-strong ASX 200 dividend shares to buy

The broker is feeling bullish about these blue chip options.

Read more »