Why is the Soul Patts share price falling today?

Is today's decline actually good news?

| More on:
A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.

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 Washington H Soul Pattinson & Company Ltd (ASX: SOL) share price is under pressure again on Wednesday.

In morning trade, the investment company's shares are down 1% to $33.51.

This compares unfavourably to a 0.1% gain by the ASX 200 index.

Why is the Soul Patts share price falling?

Unlike in recent sessions, today's decline is arguably a positive for shareholders.

That's because it has been caused by the company's shares going ex-dividend this morning.

When a share trades ex-dividend, it means that the rights to an upcoming dividend are now locked in.

As a result, if you were to buy its shares this morning, you would not be entitled to receive the dividend on payday. Instead, that dividend would go to the person selling the shares even though they won't own them when the payment is made.

As a dividend forms part of a company's valuation, its share price will tend to fall in line with its value on the ex-dividend day. After all, that cash is about to leave the company and you wouldn't want to pay for something that you won't receive.

What is Soul Patts paying to its shareholders? Let's dig a little deeper and find out.

The Soul Patts dividend

Last month, the investment company released its half-year results and reported a disappointing 33.2% decline in profit to $302.5 million.

However, this couldn't stop the company's board from continuing its long run of increasing its dividend.

Soul Patts declared a fully franked interim dividend of 40 cents per share, which was up 11.1% from 36 cents per share last year. This marked the 24th consecutive year that the company has increased its dividend payout.

Based on the Soul Patts share price at yesterday's close, this equates to a modest but still relatively attractive 1.2% dividend yield that eligible shareholders will be receiving.

Speaking of which, those eligible shareholders can now look forward to payday in under a month.  The company is planning to make its payment on 10 May.

What's next?

According to a recent note out of Morgans, its analysts are expecting total dividends of 94.1 cents per share in FY 2024. This will be up 8.2% from 87 cents per share in FY 2023.

If Morgans is correct with its estimate, this means that investors can look forward to a 54.1 cents per share dividend being declared in September and paid out in November. Based on its current share price, this final payout equates to a 1.6% 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 positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. 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

Close-up of a smiling man holding a jar containing nuggets of gold.
Gold

Newmont shares are about to trade ex-dividend. Time to buy?

Investors are running out of time if they want to snap up the latest Newmont dividend...

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Communication Shares

Here is the earnings forecast through to 2026 for Telstra shares

Is the profit outlook for Telstra shares promising?

Read more »

a smiling woman holds up two fingers and winks.
Dividend Investing

Overinvested in CBA shares? Here are two alternative ASX dividend stocks

It could be smart to diversify with these passive income ideas.

Read more »

Woman calculating dividends on calculator and working on a laptop.
Dividend Investing

2 of the best ASX dividend stocks for income investors to buy in June

Analysts have these income options high on their lists of recommendations.

Read more »

Family having fun while shopping for groceries.
Dividend Investing

Here's the Coles dividend forecast through to 2026

Will the supermarket giant continue growing its dividend?

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Cheap Shares

2 cheap ASX dividend shares I'd buy now for future income

These stocks look good value to me and pay good yields.

Read more »

Woman smiling with her hands behind her back on her couch, symbolising passive income.
Dividend Investing

Do Wesfarmers shares pay a decent ASX dividend?

Is the owner of Bunnings a compelling option for dividends?

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Bank Shares

Do Macquarie shares pay a decent ASX dividend?

Can Macquarie's dividends match the otehr bank stocks?

Read more »