This trading week seems to have gotten off to a shaky start so far this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has opened the week's trading with an early slide, currently down 0.18%. But let's talk about what's going in with the Macquarie Group Ltd (ASX: MQG) share price.
Macquarie shares closed last week on a high, banking a healthy 1.59% rise on Friday to finish up at $162.75 a share. But today, the quasi-ASX bank share has opened significantly lower, trading for just $158.87 a share at present, down 2.46%.
So what's up with Macquarie that has elicited investors to seemingly punish this ASX 200 stock so convincingly today?
Well, investors need not, and should not, panic. At least as much as this hefty drop might suggest. Some of the company's falls are probably due to the broader market's pessimism. However, the primary culprit is almost certainly what is probably the very best reason for an ASX share to drop. It's the company's ex-dividend day.
Last week, we discussed Macquarie's latest dividend, which was revealed only earlier this month. Shareholders won't be enjoying quite the same level of dividend income as they did this time last year, with Macquarie set to pay out an interim dividend of $2.55 per share, partially franked at 40%.
That compares to the 2022 interim dividend worth $3 per share.
However, if you had a particular yearning to bag that dividend, for your next passive income paycheque, I'm afraid it's too late. That's because today is the day that Macquarie shares trade ex-dividend for this upcoming payout.
Image source: Getty Images
So why are Macquarie shares dropping today?
When a company declares a dividend, it must also nominate an ex-dividend date that precedes it. This is the date that rules out new investors from receiving an upcoming dividend. Put simply, only shareholders that have their name on Macquarie shares before the ex-dividend date become eligible for receipt of the dividend. Those who buy on the ex-dividend date, or after it, miss out.
So the last day that an investor could buy Macquarie stock with the rights to this dividend attached was last Friday. From today, new investors will have to wait until 2024 to get their first Macquarie paycheque.
Due to this inherent loss of value, a company's share price usually falls by a corresponding level to whatever dividend it is about to pay out when it trades ex-dividend. That is exactly what is happening with Macquarie shares today. This is the normal process for any dividend-paying share to go through in the ASX.
This latest payout, which eligible investors can expect to receive next month on 19 December, takes Macquarie's full-year dividends to $7.05 a share, given Macquarie's July final dividend came to $4.50 per share.
This gives Macquarie a dividend yield of 4.44%. The Macquarie share price remains down by 3.52% over 2023 to date.
