Why is the Westpac share price tumbling on Thursday?

The Westpac Banking Corp (ASX: WBC) share price is on course to end the day in the red.

In afternoon trade, the banking giant’s shares are down 2.5% to $23.25.

Why is the Westpac share price dropping?

The good news for shareholders is that the weakness in the Westpac share price today is not because something bad has happened.

In fact, it’s actually for a good reason! This morning Westpac’s shares traded ex-dividend for its upcoming final dividend payment.

This means that the rights to this dividend remain with whoever was the owner of the shares at yesterday’s close. So, if you buy a parcel of shares today, you’ll not receive this dividend when it is paid and the seller will receive it instead.

Clearly, you don’t want to pay for something that you won’t receive. So, to account for this, the Westpac share price has dropped to reflect it.

Actually, had its shares not traded ex-dividend this morning, they would likely be trading higher today. That’s because the Westpac share price has dropped by 59 cents, but its dividend payment is even greater.

The Westpac dividend

Earlier this month, Westpac declared a fully franked final dividend of 64 cents per share. This was up from 60 cents per share a year earlier.

If you didn’t take part in the bank’s dividend reinvestment plan, you can look forward to receiving these dividends in your nominated bank account in just over a month on 20 December. Just in time for some last minute Christmas shopping if you’re celebrating the holiday season!

The post Why is the Westpac share price tumbling on Thursday? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 recommended Westpac Banking Corporation. 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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