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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small decline. At the time of writing, the benchmark index is down 0.1% to 7,654.3 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is down 7% to $20.14. This follows the release of the travel agent’s half-year results. Flight Centre reported a 15% increase in total transaction value to $11.3 billion and a 565% jump in underlying profit before tax to $106 million. As strong as this was, it was still short of consensus estimates.

Fortescue Ltd (ASX: FMG)

The Fortescue share price is down almost 3.5% to $26.60. This has been driven by the mining giant’s shares going ex-dividend this morning for its latest payout. Eligible shareholders can now look forward to being paid its fully franked $1.08 per share dividend next month on 27 March.

Kelsian Group Ltd (ASX: KLS)

The Kelsian share price is down 13% to $5.75. This morning, Kelsian, formerly known as Sealink, released its half-year results. It reported a 44.9% increase in revenue to $982.7 million. However, due to weaker margins, it only achieved a 20.4% lift in underlying net profit after tax and before amortisation (NPATA) to $43.1 million.

Neuren Pharmaceuticals Ltd (ASX: NEU)

The Neuren share price is down 13% to $18.73. This has been driven by the release of sales data for its Daybue product. Its partner Acadia Pharmaceuticals (NASDAQ: ACAD) announced fourth quarter Daybue net sales in the United States of US$87.1 million. It also provided 2024 guidance for sales of between US$370 million and US$420 million. This appears to be short of the market’s expectations.

The post Why Flight Centre, Fortescue, Kelsian, and Neuren shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Why is this ASX 200 pharmaceuticals stock crashing 15% today?
• How is the Fortescue share price down 3% today?
• Flight Centre shares plunge 7% despite return of the interim dividend
• Flight Centre share price on watch amid 565% half-year profit surge
• 5 things to watch on the ASX 200 on Wednesday

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 recommended Flight Centre Travel Group. 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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The S&P/ASX 200 Index (ASX: XJO) is having a fairly depressed kind of day so far this Wednesday. At the time of writing, the ASX 200 has slipped by around 0.15%. But ASX 200 lithium shares like Liontown Resources Ltd (ASX: LTR) are having a very different experience.

Liontown shares are on fire today. This lithium stock is currently up a whopping 7.97% at $1.25 a share.

But these gains aren’t just confined to the Liontown share price. The ASX’s largest lithium stock, Pilbara Minerals Ltd (ASX: PLS), is experiencing something similar, with Pilbara shares up 5.54% so far today at $4.10 each.

Sayona Mining Ltd (ASX: SYA) stock has risen 7.7%, while Arcadium Lithium plc (ASX: LTM) shares have increased by 4.43% at present.

So something is clearly in the water with lithium shares today.

Why are ASX 200 lithium shares like Liontown surging today?

Unfortunately, it’s not really clear what that something in the water actually is. There’s been no major ASX news out today from any of the big lithium stocks.

Looking at the US markets might provide some explanation, though.

Last night during US trading, we saw the share price of Albemarle Corporation (NYSE: ALB) rise significantly. Albemarle, a US$15 billion lithium giant, experienced a 5.82% surge in value last night, with the shares rising from US$121.52 up to US$128.59.

This was potentially a result of a major US broker in Mizuho raising its share price target from US$105 to US$115.

As one of the largest lithium stocks in the world, Albemarle shares often set the tone for what happens with the ASX’s lithium players.

So that’s one possible explanation for this bullishness we are seeing with Liontown shares and the like.

Another factor we can potentially point to is a growing sense that lithium prices may have found a bottom. ASX lithium shares like Liontown have been smashed in recent months as global lithium prices have plummeted. We saw this quantified in the recent ASX earnings reports from Pilbara Minerals and other lithium shares.

Have lithium prices found a bottom?

Sam Berridge, portfolio manager and resources specialist at Perennial Funds Management, recently told the Australian Financial Review (AFR) that “We are at the bottom… The big question is how long will [lithium] prices go sideways, and that depends on demand, rather than supply”.

The same report quoted Ben Cleary of Tribeca Investment Partners, who said:

I don’t expect [lithium spodumene] prices to bounce back towards where they were [around $US8,000 per tonne)… But I am comfortable that we could see long-term prices around $US1,200 which would still give Australian producers $US600 a tonne on a 50 per cent operating margin.

Of course, we also can’t discount a simple reversion to mean for ASX lithium shares. Before this week, the Liontown share price, as well as that of Pilbara Minerals and other ASX lithium shares, were exploring multi-year lows. It’s also possible that some investors are thinking that it’s time to start buying back in at these historically low share prices.

Whatever the cause of today’s strong bounce in lithium stocks, it will no doubt be welcomed by investors.

The post Why are ASX lithium shares like Liontown having such a bumper session today? appeared first on The Motley Fool Australia.

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More reading

• Should you buy Pilbara Minerals shares today?
• These are the 10 most shorted ASX shares
• Top brokers name 3 ASX shares to buy next week
• Why ASX 200 investors remain upbeat on Pilbara Minerals shares
• Brokers name 3 ASX shares to buy now

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 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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The All Ordinaries Index (ASX: XAO) is up a slender 0.2% since last Friday’s close despite some very heavy lifting from this ASX All Ords stock.

Shares in the boron and lithium miner closed on Friday trading for 16.5 cents apiece. At time of writing in afternoon trade on Wednesday, less than three full trading days later, shares are swapping hands for 31 cents apiece.

That puts this ASX All Ords stock up an eye-popping 87.9% so far this week.

Any guesses?

If you said 5E Advanced Materials Inc (ASX: 5EA), give yourself a virtual gold star.

Here’s what’s been spurring investor interest.

What’s sending the ASX All Ords stock rocketing?

The 5E Advanced Materials share price gained 6.6% on Monday after the miner released an operational update, marked as non-price sensitive.

Shares closed up another 28.6% yesterday and the All Ords stock is rocketing 37.8% higher today.

The mining operations update involves the company’s 5E Boron Americas Complex, for which it has a United States government Critical Infrastructure designation. And investor enthusiasm appears to have been piqued as the project moves closer to initial production.

Among recent progress, 5E Advanced Materials commenced mining operations last month.

The company said all four of its production wells to extract boric acid and lithium have been successfully running. Initial head grade and recovery rates were reported to be in line with historical expectations, with the wells continuing to be conditioned to achieve their final operational profile.

With final electrical engineering work at the facility now nearly completed, management expects to begin operating the plant commercially in the second quarter of 2024. If this occurs to plan, that could offer ongoing support for the ASX All Ords stock.

“This is an exciting time for all stakeholders of the company as we finalise a number of initiatives that will see us commence initial production next quarter,” 5E Advanced Materials CEO Susan Brennan said.

Brennan added:

Our operations team is working diligently to transition our facility to operational status, and we are concurrently ramping up our commercial and marketing activities in order to leverage the value of our boron and lithium with potential customers.

I cannot emphasise enough the importance 5E will represent in the US in the coming months as a new and secure producer of critical materials needed for clean energy economies.

5E Advanced Materials share price snapshot

Despite the 88% boost to the 5E Materials share price this week, the ASX All Ords stock has a way to go before recouping the past months of losses.

Shares remain down 70% over 12 months.

The post This ASX All Ords stock just surged 88% in less than 3 days! Any guesses? appeared first on The Motley Fool Australia.

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More reading

• Why is the Chalice Mining share price rocketing 20% today?
• $20,000 in savings? Here’s how I’d aim for $20,000 in passive income
• Corporate earnings, CPI and retail sales on the agenda: Scott Phillips on Nine’s Late News
• Why the Coles share price could keep rising after the result
• Why is this ASX 200 pharmaceuticals stock crashing 15% today?

Motley Fool contributor Bernd Struben 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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The Chalice Mining Ltd (ASX: CHN) share price is having a stunning session on Wednesday.

In afternoon trade, the mineral exploration company’s shares are up 20% to $1.22.

Why is the Chalice Mining share price jumping?

Investors have been scrambling to buy the company’s shares today despite there being any news out of it.

Though, it is worth noting that Chalice Mining released a presentation yesterday ahead of its appearance at the BMO Global Metals & Mining Conference.

This presentation highlighted its 100% ownership of the Gonneville project. It is the largest undeveloped palladium resource and one of the largest critical minerals discoveries in the western world.

Speaking of palladium, the price of the metal has recently started to rebound after falling heavily over the last couple of years.

And while it is still a long way from its February 2022 levels, investors may believe that this recent recovery means that a bottom has finally been reached.

What else?

It’s possible that we are witnessing a short squeeze on Wednesday.

A short squeeze is what happens when short sellers scramble to buy shares so they can close their positions.

Demand can get so strong on the buy side that it drives a share price higher and higher. This in turn can lead to other short sellers trying to close positions in a hurry, driving a share price even higher.

As per our more recent update on short selling data, the company had short interest of 9%. This means that 9% of its shares outstanding were in the hands of short sellers.

And while they may be getting burned today, they aren’t likely to be overly concerned. The Chalice Mining share price remains down 80% over the last 12 months.

The post Why is the Chalice Mining share price rocketing 20% today? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today

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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Earning $20,000 in annual passive income from $20,000 in savings may seem out of reach for many ASX investors.

But by investing in the right basket of ASX dividend shares, and importantly reinvesting those dividends, it’s a lot easier than you might think.

Now it obviously won’t happen overnight. Not unless you know of some ASX shares paying a 100% yield. (If so, drop us a line!)

But with a diversified, high-yielding ASX portfolio, and tapping into the magic of compounding, a little patience should pay off handsomely.

Here’s how I’d go about it.

Targeting ASX shares for $20,000 in passive income

Over the past three years the S&P/ASX 200 Gross Total Return Index (ASX: XJT) – which includes all cash dividends reinvested on the ex-dividend date – has gained 30%.

To give you an idea of the importance of dividends and reinvesting those payouts to turbocharge your gains over time, the S&P/ASX 200 Index (ASX: XJO) is only up 15% over that same period.

So by reinvesting my dividends, and with history as my guide, I can comfortably aim for a long-term 10% annual return to build up my passive income stream.

Within the dividend-paying ASX shares, I’d preference companies paying fully franked dividends. That should see me hold onto more of my second income at tax time. (Though we’ll stick to the 10% annual returns for the purposes of this article to keep things simple and relatively conservative.)

Now I’d spread my $20,000 across at least five different ASX dividend shares operating across different sectors and ideally in various geographic locations. That kind of diversification will reduce the risk of my passive income taking a big hit if a particular company or sector comes under unexpected pressure.

Now, let’s crunch some numbers.

To the maths!

Turning to my trusty compound interest calculator, if I invest $20,000 in ASX shares today at 10% annual returns, I’d have $66,073 in 12 years. If I didn’t want to touch my capital (I don’t), then that would yield me $6,607 a year in annual passive income.

So, we’ve got a ways to go before reaching $20,000 a year. Though not as long as you may think.

With compounding working for us, just 12 years later (or 24 years from my initial $20,000 investment in ASX shares) I’d expect to be sitting on a portfolio worth $218,282.

That should allow me to take out $21,828 a year in passive income without drawing down on that investment capital.

The post $20,000 in savings? Here’s how I’d aim for $20,000 in passive income appeared first on The Motley Fool Australia.

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More reading

• Corporate earnings, CPI and retail sales on the agenda: Scott Phillips on Nine’s Late News
• Why the Coles share price could keep rising after the result
• Why is this ASX 200 pharmaceuticals stock crashing 15% today?
• DroneShield share price flying 13% on first profitable year
• How is the Fortescue share price down 3% today?

Motley Fool contributor Bernd Struben 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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Motley Fool Australia chief investment officer Scott Phillips joined Peter Overton for Nine’s Late News on Sunday night to unpack the latest business news, including modest growth in ASX-listed corporate earnings, a look at inflation due out later in the week, and the potential for retail sales to bounce back after a poor December.  

The post Corporate earnings, CPI and retail sales on the agenda: Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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More reading

• Why the Coles share price could keep rising after the result
• Why is this ASX 200 pharmaceuticals stock crashing 15% today?
• DroneShield share price flying 13% on first profitable year
• How is the Fortescue share price down 3% today?
• Why is the Telstra share price falling on Wednesday?

Motley Fool contributor Scott Phillips 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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The Coles Group Ltd (ASX: COL) share price jumped more than 5% yesterday after investors saw the FY24 first-half result and the trading update. It’s up another 1% today.

Supermarket profits are under heavy scrutiny at the moment because of all the inflation. Let’s look at what the actual numbers tell us.

Earnings recap

Coles said that for the first eight weeks of the third quarter, supermarket sales grew by 4.9%, underpinned by volume growth. It reported it’s seeing deflation in fresh produce and meat, while packaged goods are seeing “continued moderation” in inflation. Liquor sales declined by 2.2% over the same eight-week period, due to reduced discretionary spending.

In the FY24 first half, supermarket sales were up 4.9% to $19.8 billion and total continuing operations sales grew by 6.8% to $22.2 billion.

The supermarket HY24 gross profit margin grew by 10 basis points to 26.6%, though the reported earnings before interest and tax (EBIT) fell by 17 basis points to 5.1%. The overall supermarket inflation was 3% for the half and 4.8% excluding tobacco and fresh.

Total underlying EBIT for the continuing operations rose 3.3% to $1.11 billion.

Reported net profit after tax (NPAT) from continuing operations declined 3.6% to $594 million, while underlying NPAT from continuing operations fell 0.3% to $626 million.

While the first six months of FY24 were not that impressive, the trading update’s sales growth was strong and beat the growth reported by Woolworths Group Ltd (ASX: WOW).

Why the Coles share price could keep rising

According to reporting by the Australian Financial Review, E&P Capital retail analyst Phillip Kimber said in a note to clients:

A better-than-expected result and improving sales momentum for Coles Supermarkets in early 3Q24 (much better than Woolworth’s Australian Food) is expected to support further share price gains.

After a period of seeming negative about the company, analysts now appear positive about the outlook for the business.

The Australian reported that S&P Global Ratings said:

We expect the Australian retailer’s nondiscretionary operations, scale, and cost-saving initiatives will underpin earnings through 2024.

With consumers’ household expenditure under pressure, we expect Coles’ own-brand products will continue to attract value-conscious customers and support sales growth.

Time will tell whether Coles shares do rise more this year, but things now seem to be looking up for the company.  

Will inflation scrutiny hurt (the Coles share price)?

If Coles’ margins (and/or revenue) decrease as a result of shelf price decreases, then this would weigh on profitability, which may harm the Coles share price (in the short-term).

The Motley Fool’s Scott Phillips had the following to say to the ABC about Coles and the inflation situation:

I don’t think there is obvious evidence of widespread price gouging, or their margins are unreasonable and maybe more importantly even if they were reduced, I’m not sure the size of the [savings] prize per Australian is really that big.

When talking about whether shoppers would prefer the supermarkets to make no profit at all, Phillips said:

At the end of the day, any business wants a return on the capital that’s being employed to produce the goods and services that we want.

You want to get some sort of return for that investment. Otherwise you say, ‘I’m going to take my money and do something else with it’.

And so at the one level we don’t want them to make so much money that the rest of the country is poorer as a result, and on the other hand we want enough of an incentive for these guys to actually stay in business and do something for us.

As always, we want the incentive that capitalism provides, we just want to make sure it’s appropriately regulated so no one’s taken advantage of.

Coles share price snapshot

Since the start of 2024, the Coles share price has risen by 5%.

The post Why the Coles share price could keep rising after the result appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Why Coles, G8 Education, Helia, and Reece shares are storming higher
• Everything you need to know about the new Coles dividend
• Coles share price jumps 6% on strong half-year sales growth

Motley Fool contributor Tristan Harrison 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 Coles Group. 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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Neuren Pharmaceuticals Ltd (ASX: NEU) shares are crashing deep into the red today.

At one stage today, the ASX 200 pharmaceuticals stock was down 15% to $18.16.

Neuren’s shares have recovered a touch since then but remain down by 12%.

Why is this ASX 200 pharmaceuticals stock crashing?

Investors have been hitting the sell button today after Neuren released its first sales update since a short seller described its Daybue product as a flop with horrific side effects.

According to the release, its partner Acadia Pharmaceuticals (NASDAQ: ACAD) has announced fourth quarter Daybue net sales in the United States of US$87.1 million. This is up by a sizeable 30% from US$66.9 million in the third quarter.

This was the second full quarter of sales since the product was launched in April 2023. Net sales for 2023 since April came to US$177.2 million.

In addition, Acadia has provided Daybue sales guidance for FY 2024. It expects full-year net sales in 2024 of between US$370 million and US$420 million. This equates to an average of US$92.5 million to US$105 million per quarter.

While this is strong growth, it appears to have fallen short of expectations and spooked investors.

What does this mean for Neuren?

Neuren estimates that Acadia’s update means royalties of A$12.8 million for the fourth quarter, which is up from A$10.4 million for the third quarter. This will bring its full year royalties to A$26.8 million for 2023

And based on Acadia’s guidance, management expects the ASX 200 pharmaceuticals stock to generate royalties of between A$61 million and A$70 million in 2024 from Daybue.

Neuren shares remain up over 150% since this time last year despite recent weakness.

The post Why is this ASX 200 pharmaceuticals stock crashing 15% today? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• A hot ASX stock with ‘multiple catalysts’ looming is 8% down. Time to buy
• Why Inghams, IAG, Neuren Pharmaceuticals, and Pro Medicus shares are sinking today
• This ASX 200 healthcare share is diving 13% as short sellers take aim
• If you’d put $20,000 in this ASX healthcare stock in December 2021, you’d have $257,000 now

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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The DroneShield Ltd (ASX: DRO) share price is going great guns on Wednesday after releasing its full-year results for FY23.

At the time of writing, shares in the counter-drone solutions company are up 13.2%, trading at 86 cents. Meanwhile, the S&P/ASX Small Ordinaries Index (ASX: XSO) is down 0.08%.

DroneShield share price rallies on record results

• Revenue up 226% on the prior year to a record $55.1 million
• Cash receipts from sales and grants up fivefold to a record $73.5 million
• Inaugural profit after tax of $9.3 million, up from a $900,000 loss
• Cash balance of $57.9 million as of 31 December 2023
• Pipeline of more than $510 million

What else happened in FY23?

It was a year of records, once again, for the counter-drone defence company. Amid continuing conflicts in Ukraine and elsewhere, the appetite for the use of drones in combat remained robust.

To meet this demand, the company moved into a new manufacturing facility during the year that is three times the size of its original site. Likewise, the DroneShield team doubled in size to more than 100 people in 2023.

DroneShield recorded $73.5 million in cash receipts in FY23, marking a significant step up from the previous $15.6 million. Part of this achievement stems from the company landing a record $33 million order from a United States Government agency in July 2023.

The DroneShield share price leapt nearly 19% amid news of the $33 million order on 17 July. The company’s shares have soared 156% since then, as shown below.

Another important facet for DroneShield is the increasing portion of subscription revenue. A total of $1.39 million worth of revenue was generated by the software-as-a-service (SaaS) segment in FY23, increasing fourfold.

What’s next for DroneShield?

Guidance for FY24 revenue or profits was absent in today’s release. However, the company did note its 2024 pipeline stands at $388 million. The United States maintains the bulk of this pipeline, with $231 million allotted to 41 projects under discussion.

Now holding $57.9 million in cash and no debts, the team believe 2023 has laid the groundwork for a promising 2024.

DroneShield share price snapshot

The return from the S&P/ASX 200 Index (ASX: XJO) pales in comparison to that of the DroneShield share price over the last year. Amassing a 130% increase over the past 12 months, DroneShield is a staggering 125% ahead of the benchmark index.

And now profitable, we can determine a price-to-earnings (P/E) ratio. Based on the $9.3 million 2023 profit, DroneShield shares now trade at an earnings multiple of 54 times. For context, the global defence industry trades at roughly 36 times earnings.

The post DroneShield share price flying 13% on first profitable year appeared first on The Motley Fool Australia.

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More reading

• How has the DroneShield share price gained 90% in a month?
• Why Boral, Dicker Data, Droneshield, and Novonix shares are charging higher
• Forget Fortescue shares: This ASX stock could be poised for a bull run in 2024
• Up 80% in 6 months, is a monumental earnings boom just around the corner for this tiny ASX stock?
• Why is the DroneShield share price jumping to a 52-week high today?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has recommended DroneShield. 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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It’s been a bumpy start to this Wednesday’s trading for the S&P/ASX 200 Index (ASX: XJO) and ASX shares. At the time of writing, the ASX 200 has entered red territory, currently down 0.23% at around 7,645 points. That’s after the index initially opened in the green. But let’s talk about the Fortescue Ltd (ASX: FMG) share price.

At first glance, it looks as though this famous ASX 200 mining stock is having an unexpectedly brutal day so far.

Fortescue shares closed at $27.52 each yesterday afternoon. But this morning, those same shares opened at $26.92 and are currently trading at $26.72 at the time of writing. That’s a loss worth 2.91%. It was even worse for Fortescue earlier this morning as well. We saw the miner get as low as $26.57 – a loss of 3.45% at the time.

So what on earth is going on with the Fortescue share price this Wednesday? It does seem a little unfair, given that Fortescue’s mining peers like BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) are up by numbers like 0.34% and 1.2% so far today.

Well, Fortescue shareholders have nothing to complain about. Fortescue shares are falling today for what is arguably the best reason a company can fall in value. Its shares have just traded ex-dividend.

Fortescue share price drops as new investors shut out from upcoming dividend

Last week, we covered Fortescue’s latest half-year earnings. At the time, investors were impressed by Fortescue’s 21% rise in revenues, 36% spike in underlying earnings, and 41% surge in net profits that was reported for the six months to 31 December.

But the metric most relevant to today’s share price falls was the 44% increase that Fortescue announced for its next interim dividend. Yep, the company revealed that shareholders will be treated with an interim dividend worth a stonking $1.08 per share, fully franked, on 27 March next month.

That looks pretty compelling compared to Fortescue’s last interim dividend from 2023, which was worth just 75 cents per share. Last year’s September final dividend came in at around $1 per share (also fully franked).

However, eligibility for this dividend has now closed. As we reported on Monday, the last day investors could buy Fortescue shares with the rights to this upcoming dividend attached was yesterday. Today, Fortescue shares have now lost the value of this payment, thanks to the company trading ex-dividend.

So if you buy Fortescue shares from today onwards, you’ll have to wait until the company (presumably) forks out its final dividend later this year.

So it’s no wonder why we are seeing such a drastic decline in the value of the Fortescue share price this Wednesday. It’s a very normal occurrence when a company trades ex-dividend. Particularly a generous income payer like Fortescue.

At the current Fortescue share price, this ASX 200 mining giant now trades on a dividend yield of 7.78%.

The post How is the Fortescue share price down 3% today? appeared first on The Motley Fool Australia.

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More reading

• Hoping to bag the Fortescue dividend? You better be quick!
• Why these 4 ASX 200 shares grabbed the Motley Fool’s headlines this week
• Better buy: Fortescue or BHP shares?
• Qantas descends, Treasurer’s RBA dilemma and Twiggy’s payday: Scott Phillips on Nine’s Late News
• 25 ASX 200 shares with ex-dividend dates next week

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 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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