The IGO Ltd (ASX: IGO) share price is having a tough time on Wednesday.
At the time of writing, the battery materials producer's shares are down a sizeable 6% to $13.41.
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Why is the IGO share price being crunched?
The good news for shareholders is that today's decline has nothing to do with a broker downgrade or a collapse in battery material prices.
In fact, today's decline could be classed as a positive for holders of IGO shares. That's because today's pullback has been driven largely by the company's shares trading ex-dividend this morning for its upcoming dividend.
When a share goes ex-dividend, it means the rights to the dividend have now been settled. As a result, anyone buying IGO shares today won't be entitled to that payout when it is made. Instead, the seller of its shares will receive the dividend even though they no longer hold those shares.
As you would expect, nobody wants to pay for something they won't receive and the IGO share price has dropped to reflect this.
The IGO dividend
Last month IGO released its FY 2023 results and reported a 13% increase in revenue to $1.02 billion and a 177% jump in underlying EBITDA to $1.99 billion. The latter includes a contribution from its investment in the lithium joint venture, Tianqi Lithium Energy Australia.
This strong result allowed the IGO board to declare a fully franked final dividend of 44 cents per share and a special dividend of 16 cents per share. This took its full-year payout to 74 cents per share, which was up 640% from FY 2022.
Eligible shareholders can now look forward to receiving IGO's final and special dividends in their bank accounts later this month on 28 September.
Based on yesterday's IGO share price, these two dividends equate to a generous 4.25% dividend yield. This means any shareholders that have a $10,000 investment, for example, will receive approximately $425 in dividends at the end of the month. Not bad!
