The market may be pushing higher again today but the same cannot be said for the Commonwealth Bank of Australia (ASX: CBA) share price.
In afternoon trade the banking giant's shares are down 1% to $85.41. This compares to a 0.4% gain by the S&P/ASX 200 Index (ASX: XJO).
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What is happening?
The decline in the CBA share price might be confusing investors, especially given how the rest of the big four are on the rise today.
For example, the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is up 1.2%, the Westpac Banking Corp (ASX: WBC) share price is up 0.7%, and the National Australia Bank Ltd (ASX: NAB) share price is up 0.8% following its first quarter update.
The good news for the shareholders of Australia's largest bank is that today's decline in the CBA share price has nothing to do with its performance and everything to do with its dividend.
This morning CBA shares traded ex-dividend. This means that the rights for the upcoming CBA interim dividend now lie with the seller rather than the buyer. In light of this, a share price generally declines in order to reflect this. After all, you wouldn't want to pay full price for a share if you're not going to receive the dividend.
In fact, had it not been going ex-dividend today, the CBA share price would actually be pushing higher.
The CBA interim dividend is a fully franked $1.50 per share, whereas its shares have declined by $1.00.
What now?
Eligible CBA shareholders can now look forward to being paid this dividend into their nominated accounts in around six weeks on 30 March.
Looking ahead, analysts at Citi are expecting the bank to declare a final dividend of $1.95 per share, which will bring its full year dividend to $3.45 per share.
Based on the current CBA share price, this represents a fully franked 4% yield.
