There are two silver linings to the recent market sell-off that saw the ASX 200 dive by almost 10% over just four weeks.
The first silver lining is that several ASX 200 blue-chip shares fell to multi-year lows, presenting a potential opportunity.
The second silver lining is the market fall occurred during the period in which many ASX companies were calculating their DRP prices.
DRP stands for dividend reinvestment plan.
This is an elective plan whereby shareholders can ask companies to automatically use their dividends to buy more shares instead.
Sometimes, ASX companies offer a DRP discount to encourage shareholders to invest in more stock.
Otherwise, they undertake their own unique calculation process to determine what their DRP share price will be.
Many companies use an average aggregate share price from several days of trading to make this determination.
This process occurs during the period after the dividend is announced and before it is paid.
The market plunge spanned two weeks during earnings season and two weeks after, corresponding very nicely with this period.
This means many ASX investors will pick up DRP shares at a much lower price than where the stock was trading when the dividend was announced.
Here are three examples.
Image source: Getty Images
Investors in CBA, Fortescue, and BHP shares get a DRP benefit
For the record, the ASX 200 fell 9.43% from its record closing high on 14 February to the closing trough on 13 March.
(It's since rebounded by 2.62% at the time of writing).
During this period, Commonwealth Bank of Australia (ASX: CBA) calculated its DRP share price.
CBA's method was taking the average of the daily volume weighted average market price of CBA shares sold on the ASX or Cboe over 20 days between 24 February and 21 March.
This led to a DRP share price of $149.89.
On 12 February, when CBA announced its interim dividend, the share price closed at $165.98.
This means the DRP share price is almost 10% lower than where CBA shares were on the day of the bank's 1H FY25 results.
Today, CBA shares are trading at $148.92, up 0.87% for the day.
CBA will pay a fully franked interim dividend of $2.25 per share on Friday. It will issue the DRP shares on the same day.
Fortescue Ltd (ASX: FMG) also calculated its DRP share price during the ASX 200's near-market correction.
The miner took the average of the daily volume weighted average market price of all Fortescue shares traded over five days from 3 March.
This led to a DRP share price of $16.1763.
On 20 February, when Fortescue announced its interim dividend, the share price closed at $18.24.
This means the DRP share price is 11% lower than where Fortescue shares were on the day of the miner's 1H FY25 results.
On Tuesday, Fortescue shares are trading at $16.08, down 1.35% for the day.
Fortescue will pay a fully franked interim dividend of 50 AU cents per share on Thursday. It will issue the DRP shares on the same day.
BHP Group Ltd (ASX: BHP) is doing things a bit differently.
Instead of announcing a specific DRP share price, BHP intends to buy the DRP shares on-market on behalf of investors "on or as soon as practicable after the dividend payment date".
The dividend payment date is this Thursday.
BHP said:
It may be necessary to carry out several market transactions to acquire the number of shares required and the DRP price will be the average of the actual deal prices of those transactions.
On 18 February, when BHP announced its interim dividend, the share price closed at $40.97.
The BHP share price is currently $39.02, down 0.76% for the day.
In other dividend news, BHP has declared the currency conversion for its next dividend payment.
BHP routinely declares its dividends in US currency. This time around, BHP declared a fully franked interim dividend of 50 US cents.
BHP has since advised the amount per share it will pay in Australian currency on Thursday.
Based on an exchange rate of AU/US 63.2163 cents, BHP shares will pay an AU dividend of 79.093525 cents per share.
