Commonwealth Bank of Australia (ASX: CBA) shares are underperforming on Wednesday.
At the time of writing, the banking giant’s shares are down 0.5% to $177.13.
This compares unfavourably to the performance of the S&P/ASX 200 Index (ASX: XJO), which is up 0.4% this afternoon.
In addition, the rest of the big four banks are pushing higher today, with National Australia Bank Ltd (ASX: NAB) shares leading the way with a gain of 5%.
Let’s see why CBA shares are trailing the market and its peers today.
What’s going on with CBA shares?
There’s one good reason why Australia’s largest bank’s shares are under pressure today. That is that they are trading ex-dividend for CBA’s interim dividend of FY 2026.
When a share goes ex-dividend, it means the rights to that payout are now locked in. As a result, any investors that are buying the bank’s shares today will not be entitled to receive the dividend when it is paid.
It will instead be paid to the seller of the shares, even though they won’t own them when payday comes around.
A dividend forms part of an ASX share’s valuation. This means that it will tend to drop in line with the value of the payout to reflect this. After all, prospective shareholders don’t want to pay for something that they won’t receive.
The CBA dividend
Last week, CBA released its half-year results and reported a cash net profit of $5.45 billion. This was an increase of 6% on the prior corresponding period.
This was driven by lending and deposit volume growth in its core businesses, which was partly offset by lower margins and higher operating expenses. The latter reflects inflationary pressures and its continued investment in technology.
In light of this profit growth, the CBA board was able to declare a fully franked interim dividend of $2.35 per share. This was up 4% year on year and represents a payout ratio of 74%.
Commenting on the payout, CEO Matt Coymn said:
Our history of long-term decision making has created a strong, resilient bank that supports our customers and communities and delivers for shareholders. This has allowed us to declare an interim dividend of $2.35 per share, fully franked.
When is pay day?
Eligible CBA shareholders can look forward to receiving this payout next month. CBA is scheduled to make its payment on 30 March.
The post Why are CBA shares falling today? appeared first on The Motley Fool Australia.
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More reading
- 5 things to watch on the ASX 200 on Wednesday
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- Here’s the earnings forecast out to 2030 for CBA shares
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.