Why is the Coles share price having such a lousy end to the week?

It hasn’t been a great end to the trading week so far this Friday for the S&P/ASX 200 Index (ASX: XJO). At the time of writing, the ASX 200 is almost flat, having gained just 0.51% at around 6,850 points.

But let’s talk about the Coles Group Ltd (ASX: COL) share price.

Coles shares closed at $17.77 each yesterday. But today, the ASX 200 grocer opened at $17.58 a share. It’s now going for $17.64 at the time of writing. That’s down 0.73% from yesterday’s closing price.

So why are Coles shares underperforming the market so dramatically today?

Why is the Coles share price losing to the ASX 200 on Friday?

Well, it’s due to what is probably the best reason to have a share go down in value – Coles has just traded ex-dividend for its upcoming final dividend payment.

As we discussed yesterday, Coles declared a final dividend of 30 cents per share, fully franked, during the company’s full-year earnings report for FY22 that was released last month.

This dividend is a 17.85% rise over FY21’s final dividend of 28 cents per share. It takes the company’s full-year dividends for FY22 to 63 cents per share. That’s a rise of 3.3% over FY21’s total.

So investors are set to receive this payment later this month on 28 September. But to be eligible to receive the dividend, investors must have held Coles shares as of yesterday’s market close.

When a company trades ex-dividend, all new investors are cut off for the upcoming dividend payment. As such, we tend to see a share price fall that is more or less commensurate with the value of this dividend on the ex-dividend date.

This reflects the reality that the value of this dividend payment is now unavailable to newer investors. This makes Coles shares intrinsically less valuable.

Hence today’s share price drop.

So while ASX investors might not like Coles’ share price falls today, I’m sure they will appreciate the dividend coming their way in a few weeks. You can’t have one without the other.

At the current Coles share price, this ASX 200 blue chip share has a market capitalisation of $23.55 billion, with a dividend yield of 3.57%.

The post Why is the Coles share price having such a lousy end to the week? appeared first on The Motley Fool Australia.

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More reading

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• Here are the top 10 ASX 200 shares today
• Is the Endeavour share price a bargain after its big tumble in August?
• Why Coles, Fisher & Paykel, New Hope, and Nitro shares are rising
• 3 ASX 200 shares defying today’s sell-off to surge higher

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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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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