Why is the ANZ share price sinking today?

Is today's decline actually good news for investors?

| More on:
A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.

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 ANZ Group Holdings Ltd (ASX: ANZ) share price is starting the week in the red.

In morning trade, the banking giant's shares are down by 4% to $27.89.

As a comparison, the benchmark ASX 200 index is currently 0.1% lower in early trade.

Why is the ANZ share price tumbling?

The big four bank's shares are falling today after trading ex-dividend for its upcoming interim dividend.

When a share trades ex-dividend, it means that the rights to an impending dividend payment are now settled.

As a result, if you were to buy its shares today, the rights to that dividend would stay with the seller and not transfer to the buyer.

Given that a dividend forms part of a company's valuation, a share price will tend to drop in line with the value of the dividend on the ex-dividend date. After all, it new buyers don't want to pay for something that they won't receive.

What is the ANZ dividend?

Last week, ANZ released its first-half results and reported a cash profit of $3,552 million for the six months ended 31 March. This represents a 1% decline compared to the second half of FY 2023.

This reflects a strong performance from the Institutional business, which reported a 12% lift in cash profit to $1,522 million, which was offset by a poor half for the Australia Retail business. It posted a 9% decline in cash profit to $794 million despite delivering above-system home loan growth with pricing above cost of capital.

However, much to the delight of shareholders, that profit decline didn't stop the bank from increasing its dividend by 2 cents year on year to 83 cents per share. This dividend is partially franked at 65%.

Based on Friday's closing ANZ share price of $29.09, this dividend equates to an attractive 2.9% dividend yield. And there's still a final dividend coming in six months.

But what will that dividend be? Analysts at Goldman Sachs believe that a final dividend of 81 cents per share will be declared with the bank's full year results. This will bring its total dividends for the year to $1.66 per share. This equates to a dividend yield of 5.7% based on last week's closing price.

When is pay day?

Eligible shareholders won't have to wait too long until they are paid out the bank's interim dividend.

ANZ is currently scheduled to make this dividend payment in 7 weeks on 1 July.

ASIC investigation

In other news, also potentially weighing on the ANZ share price is reports that ASIC is investigating the company for suspected contraventions of a number of provisions of the ASIC Act and the Corporations Act.

According to The Australian, the investigation relates to ANZ's execution of a 2023 issuance of 10-year Treasury Bonds by the Australian Office of Financial Management.

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 Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

Woman with $50 notes in her hand thinking, symbolising dividends.
Bank Shares

If I buy 1,000 CBA shares, how much passive income will I receive?

CBA's dividends might not be as lucrative as you'd think...

Read more »

Focused man entrepreneur with glasses working, looking at laptop screen thinking about something intently while sitting in the office.
Bank Shares

Are Westpac shares good value or expensive?

This banking giant's shares have been strong performers this year. Is it too late to invest?

Read more »

Man pointing at a blue rising share price graph.
Bank Shares

Guess which ASX 200 bank stock just hit a 4-year high?

The bank’s profitability prospects are increasing.

Read more »

excited investor making fist at computer screen
Bank Shares

Would I be crazy to buy CBA shares at $121?

The CBA share price is close to an all-time high.

Read more »

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

What's the dividend yield of NAB shares right now?

What’s the size of NAB’s payout?

Read more »

A woman standing on the street looks through binoculars.
Bank Shares

Here is the earnings forecast through to 2026 for ANZ shares

Dividend investors will be keen to see what's on the horizon for ANZ.

Read more »

Happy man working on his laptop.
Bank Shares

ASX 200 bank stock smashing the benchmark on Friday as a key metric strengthens

Investors are sending the ASX 200 bank stock surging on Friday. But why?

Read more »

A woman in a bright yellow jumper looks happily at her yellow piggy bank representing bank dividends and in particular the CBA dividend
52-Week Highs

Why is the CBA share price setting a new all-time high today?

Australia's biggest bank just became more expensive. What is driving the demand?

Read more »