How is the Coles share price down 3% today?

Coles investors should be delighted with the company's share price drop today.

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It's been a slow start to Tuesday's trading so far for the S&P/ASX 200 Index (ASX: XJO). At the time of writing, the ASX 200 has slipped by 0.07%, and is down to around 7,730 pints. That makes what's happening with the Coles Group Ltd (ASX: COL) share price appear even stranger.

Coles shares are seemingly getting singled out for some punishment too. The ASX 200 supermarket stock closed at $17.03 a share yesterday afternoon. But this morning, Coles shares opened at just $16.75 each and are currently trading at $16.52. That's a fall worth a hefty 2.99%.

But investors shouldn't be too concerned. This steep share price might even be welcomed by some investors. That's because today is Coles' ex-dividend date.

Supermarket falls as shares trade ex-dividend

Last month, Coles announced its latest earnings, covering the six months to 31 December. As we discussed at the time, this set of earnings was well-received by investors. Coles reported a 6.8% uptick in revenue from continuing operations, as well as a 4.2% increase in underlying earnings to $1.9 billion.

This led to Coles declaring an interim dividend of 36 cents per share, fully franked, for the period. That's steady on last year's interim dividend

However, as we warned last week, Coles is scheduled to trade ex-dividend for this upcoming payment today. That means that anyone who wanted to secure this dividend but didn't already own Coles shares, needed to own them as of yesterday's closing bell.

Today, Coles stock no longer comes with the rights to receive this upcoming dividend attached.

As such, Coles shares have just become intrinsically less valuable. So it's no surprise to see the grocer's share price take a bit of a hit. This is the norm when a dividend stock trades ex-dividend.

For anyone who owned Coles shares as of yesterday's close, the dividend payday is set for 27 March later this month.

Coles share price snapshot

Coles shares have bounced since the company reported its earnings last month, leaving the company with a year-to-date gain of 2.23% at present. However, over the past 12 months, the Coles share price remains down by 6.4%.

At current pricing, Coles shares are trading on a dividend yield of 3.98%.

Motley Fool contributor Sebastian Bowen 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 Coles 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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