Why the Fortescue (ASX:FMG) share price is sinking 6% today

Here's why the Fortescue Metals Group Limited (ASX:FMG) share price has come under pressure and is sinking lower on Monday morning…

| More on:
white arrow pointing down

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Fortescue Metals Group Limited (ASX: FMG) share price has come under pressure on Monday.

In morning trade, the iron ore producer's shares are down 6% to $22.72.

Why is the Fortescue share price sinking today?

The good news for shareholders is that today's decline has nothing to do with the company's performance or the iron ore price.

This decline is entirely attributable to the fact that the Fortescue share price is trading ex-dividend today.

When a share trades ex-dividend, it means that it is trading without the rights to an upcoming dividend. In light of this, anyone buying shares from between now and the dividend payment date, will not be receiving the distribution.

As a result, a share price will generally drop in line with the dividend being paid to reflect this.

The Fortescue dividend

Last month Fortescue released its half year results and revealed a 44% increase in revenue to US$9,335 million and a 66% lift in net profit after tax to US$4,084 million.

This strong form allowed the Fortescue board to declare a fully franked interim dividend of $1.47 per share, up a massive 93.4% on the prior corresponding period.

Based on the Fortescue share price at Friday's close, this interim dividend represents a 6% yield. This is roughly in line with the drop its shares have made this morning.

Eligible shareholders can now look forward to being paid this monster dividend in just over three weeks on 24 March.

Other shares going ex-dividend

Fortescue isn't the only company that has shares going ex-dividend this morning.

Also trading ex-dividend are Credit Corp Group Limited (ASX: CCP) shares, Evolution Mining Ltd (ASX: EVN) shares, and Worley Ltd (ASX: WOR) shares.

As with Fortescue, these three shares are also trading lower on Monday morning.

Motley Fool contributor James Mickleboro 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 Bruce Jackson.

More on Share Market News

Contented looking man leans back in his chair at his desk and smiles.
Share Market News

5 things to watch on the ASX 200 on Thursday

Here's what to expect on the local market today.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares can rise 20% to 50%

Let's see which shares are being tipped to rocket from current levels.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors panicked when the latest inflation figures came out today.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Broker Notes

Why Guzman Y Gomez shares are a sell

Goldman Sachs has given its verdict on the burrito seller.

Read more »

A man pulls a shocked expression with mouth wide open as he holds up his laptop.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Mac Copper, Pro Medicus, Web Travel, and Yancoal shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Fisher & Paykel Healthcare, IPD, and Predictive Discovery shares are falling today

These shares are having a tough time on hump day. But why?

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

How are ASX 200 investors responding to the latest Aussie inflation numbers?

The ASX 200 was up 0.2% today before the ABS reported the latest inflation figures.

Read more »