Why is the Macquarie share price getting hammered on Monday?

Investors shouldn't be worried about today's big share price drop…

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It's been a fairly bleak start to the trading week so far this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has lost 0.22% of its value, pulling the index down to just over 7,730 points. But it's looking like it's a lot worse for the Macquarie Group Ltd (ASX: MQG) share price.

Last Friday, Macquarie shares closed at $193.27 each. But this morning, the ASX 200 financial stock and investment bank opened at $190.09 and is currently trading at $190.38, apparently down a hefty 1.5%.

So why are Macquarie shares seemingly getting hammered by double the broader market falls this Monday?

Well, fortunately, investors have nothing to complain about. The Macquarie share price is taking a beating for possibly the best reason a share drops in value – it has just traded ex-dividend for its upcoming shareholder payment.

It was only at the start of this month that Macquarie investors got a look at their company's latest full-year earnings, covering the 12 months to 31 March.

As we went through at the time, these earnings were a little tough for investors to go through. Macquarie reported a 12% drop in operating income at $16.89 billion. The company's net profits dropped even more, falling 32% to $3.52 billion.

This led to Macquarie revealing that its final dividend for the period would come in at $3.85 per share, partially franked at 40%.

Macquarie share price drops as ex-dividend date arrives

That might also have been a disappointing announcement for investors, considering Macquarie's final dividend from 2023 was worth $4.50 per share (also 40% franked).

However, this latest dividend is worth much more than the interim payout of $2.55 that shareholders enjoyed in December.

But last Friday was the last day that anyone who didn't already own Macquarie shares could have bought them with the rights to receive this dividend attached. Today, the company has traded-ex-dividend, which means that any new investors who buy shares from today onwards miss out on this round.

This is why we are seeing such a decisive drop in the Macquarie share price compared to where it was last Friday. There are no free rides on the ASX, so this fall simply reflects the loss of value of this dividend for new investors. It's the conventional share price reaction for any ASX dividend share that goes 'ex-div'.

Eligible Macquarie investors can now look forward to receiving this latest payout from the bank on 2 July later this year.

This ASX 200 financial stock has a trailing dividend yield of 3.36% at the current Macquarie share price. Despite today's falls, Macquarie shares remain up a decent 3.06% year to date.

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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie 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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