The real reason the NAB (ASX:NAB) share price is under pressure today

The National Australia Bank Ltd (ASX:NAB) share price is trading lower on Thursday morning. Here's why the bank's shares are in the red…

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A businessman holds his glasses in concern, indicating uncertainly in the ASX share price

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The National Australia Bank Ltd (ASX: NAB) share price has been a poor performer on Thursday.

In late morning trade, the banking giant's shares are down over 2% to $25.95.

Why is the NAB share price trading lower today?

Although the S&P/ASX 200 Index (ASX: XJO) is under pressure today and tumbling lower again following a disappointing night of trade on Wall Street, that isn't the reason for the weakness in the NAB share price.

The real reason for today's weakness is that this morning the bank's shares traded ex-dividend for its upcoming interim dividend.

When a share trades ex-dividend, it means that the rights to an impending dividend payment are no longer available to new buyers. In light of this, a share price will usually drop in line with the value of the dividend to reflect this.

The NAB dividend

Earlier this month, NAB released its half year results and reported cash earnings of $3,343 million for the six months ended 31 March. This was up 94.8% on the prior corresponding period. It was also a 35.1% increase if you exclude large notable items.

This return to form allowed the bank's board to declare a fully franked interim dividend of 60 cents per share. This was double last year's interim dividend and represents a 2.3% yield based on its current share price.

What's next?

After going ex-dividend today, eligible shareholders can now look forward to receiving this dividend in their bank accounts in just over seven weeks on 2 July.

Interestingly, despite the market weakness today, the NAB share price would actually be trading a fraction higher if it were not going ex-dividend.

At the time of writing, the NAB share price is down 59 cents to $25.95, which compares to the 60 cents per share fully franked dividend it will soon be rewarding shareholders with.

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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.

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