Why is the Telstra share price falling on Wednesday?

The telco giant's shares are under pressure. But is it good news really?

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The Telstra Group Ltd (ASX: TLS) share price is falling again on Wednesday.

In morning trade, the telco giant's shares are down over 1% to $3.80.

Why is the Telstra share price falling?

But don't worry, today's decline isn't because of a broker downgrade or some bad news. In fact, the weakness in the Telstra share price today is actually for a good reason.

That's because today is the day that Telstra's shares go ex-dividend for its impending dividend payment.

When a share trades ex-dividend, the rights to an upcoming payment are settled and new buyers will not be receiving the payout. As a result, a company's share price will generally drop in line with the value of the dividend to reflect this.

After all, you don't want to pay for something you won't receive.

Telstra results

In case you missed it, Telstra released its half-year results earlier this month and posted a 1.2% increase in total income to $11,700 million and a 3.1% lift in underlying EBITDA to $4,001 million.

This allowed the Telstra board to increase its fully franked interim dividend by 5.9% to 9 cents per share.

Management highlights that this is consistent with its capital management framework to maximise its fully franked dividends and seek to grow them over time.

Interestingly, Telstra's payout for the first half equates to a dividend yield of 2.35% based on where its shares closed yesterday's session. This means that if you were to take the dividend out of the equation, the Telstra share price would actually be trading higher today.

When is pay day?

Eligible shareholders won't have to wait long until they receive Telstra's dividend.

Telstra is scheduled to pay the 9 cents per share fully franked interim dividend on 28 March.

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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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