Why is the BHP share price sinking today?

The BHP Group Ltd (ASX: BHP) share price is under pressure on Thursday.

In morning trade, the mining giant’s shares are down 2% to $43.37.

Why is the BHP share price sinking?

The good news for shareholders is that today’s weakness is not due to a broker downgrade or a crashing iron ore price.

Rather, today’s decline could actually be classed as a positive for them.

That’s because the decline has been driven by the Big Australian’s shares trading ex-dividend this morning for its next dividend.

When a share goes ex-dividend, it means that the rights to the payout are now settled.

So, even if you were to buy BHP’s shares today, you wouldn’t receive this dividend on pay day. Instead, it will go into the bank account of the seller of its shares.

As a dividend forms part of the BHP share price valuation, it has fallen today to reflect this. After all, nobody wants to pay for something they won’t receive.

The BHP dividend

When BHP released its half-year results last month, it reported a 6% increase in revenue to US$27.2 billion and flat normalised earnings of US$6.6 billion.

This allowed the BHP board to declare a fully franked interim dividend of 72 US cents per share (A$1.10 per share) for the period.

With the BHP share price going ex-dividend for this today, it means that pay day is just around the corner for investors.

At present, the BHP dividend is scheduled to be paid to eligible shareholders later this month on 28 March.

Based on the BHP share price at yesterday’s close, this dividend equates to a very attractive 2.5% dividend yield.

The post Why is the BHP share price sinking today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Insiders have been buying these ASX 200 mining shares
• 3 ASX 200 shares I think could grow to be bigger than BHP one day
• 5 things to watch on the ASX 200 on Tuesday
• Want the next BHP dividend? You don’t have long to act

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. 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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