CSL Ltd (ASX: CSL) shares are trading in the red today and are currently swapping hands more than 1% lower at $299.80 apiece.
Whilst nothing price-sensitive was released from CSL today, the downside comes as the stock goes ex-dividend.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down less than 1% on the day.
Let's see what the situation is.
CSL shares fall as they go ex-dividend
Investors who purchased CSL shares before 9 September 2024 are set to receive the company's final dividend of US$1.45 per share.
However, new investors buying in today will no longer be eligible for this payout. The dividend payout — expected to convert to approximately A$2.17 per share based on current exchange rates — is locked in for existing shareholders only.
And while seeing the share price dip might be unsettling, it's important to remember that this is a normal part of trading around ex-dividend dates.
Because the dividend is paid with a company's cash, this 'asset' leaves the company once paid.
In other words, the value of the dividend is essentially deducted from the share price.
As such, today's dip in CSL shares reflects the impact of the dividend payout on stock price and does not reflect any fundamental issues with CSL's fundamentals or its business.
In fact, CSL reported reasonable financials for FY24, with an 11% increase in revenue to US$14.8 billion and a net profit of US$2.91 billion.
The company has also forecast further growth of 10% to 13% for FY25, giving long-term investors reasons to remain confident.
CSL's final dividend is also 12% above last year's payment of US$1.29 per share.
What's next?
Eligible investors who currently own CSL shares will receive their dividend payment on 2 October 2024.
CSL has not offered a dividend reinvestment plan (DRP) for this payout, meaning the payment will be made in cash.
While short-term fluctuations in CSL shares can be worrying, long-term investors may see this as an opportunity.
Bell Potter, for example, rates CSL as a buy, highlighting its margin recovery and positive earnings outlook for FY25–FY26.
It values the biotech giant at $327.42 apiece, around 14% upside potential at the time of writing.
Foolish takeout
CSL shares are sliding into the red today despite no price-sensitive announcements. As the stock goes ex-dividend, normal pricing mechanisms will occur to reflect the value of the dividend payout.
The stock is up 11% in the past year.
