Wesfarmers’ shares are under pressure on Wednesday…
The post Here’s why the Wesfarmers (ASX:WES) share price is sinking today appeared first on The Motley Fool Australia. –
The Wesfarmers Ltd (ASX: WES) share price is falling on Wednesday.
In morning trade, the conglomerate’s shares are down 3% to $58.16.
Why is the Wesfarmers share price sinking?
The good news is that the weakness in the Wesfarmers share price today has nothing to do with its operational performance or a broker note.
Instead, the company’s shares are falling after trading ex-dividend this morning for its final dividend of FY 2021.
What dividend is Wesfarmers paying?
Last month Wesfarmers released its full year results and revealed a 10% increase in revenue to $33,941 million and a 16.2% lift in net profit after tax to $2,421 million.
This allowed the Wesfarmers Board to declare a fully franked final dividend of 90 cents per share, which took its full year dividend to 178 cents per share.
This morning Wesfarmers’ shares are trading ex-dividend for this final dividend. This means that new buyers of the company’s shares will not be entitled to the dividend when it is paid on 7 October. As a result, the Wesfarmers share price has dropped to reflect this.
Earlier this year Wesfarmers completed the demerger of the Endeavour Group Ltd (ASX: EDV) business. This saw Wesfarmers shareholders receive shares in the drinks business.
This morning the Endeavour share price is trading lower after it went ex-dividend as well. It is paying an inaugural final dividend of 7 cents per share to shareholders.
This means that investors that held onto their Endeavour shares following the demerger can look forward to receiving both dividends in the coming weeks. The Endeavour dividend is being paid a little earlier than the Wesfarmers dividend on 22 September.
But wait there’s more
Investors that hold onto their Wesfarmers shares can also look forward to a potential return of capital of 200 cents per share.
The Board-recommended distribution remains subject to shareholder approval at the 2021 Annual General Meeting on 21 October 2021. However, the market is expecting the vote to be a mere formality.
If all goes to plan, Wesfarmers intends to pay this capital return on 2 December.
Should you invest $1,000 in Wesfarmers right now?
Before you consider Wesfarmers, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Wesfarmers wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
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 owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.