The Nick Scali Limited (ASX: NCK) share price will be on watch tomorrow as the ASX 300 retail share turns ex-dividend.
As of tomorrow, Nick Scali will be taking away entitlements to its recently-declared fully franked final dividend of 35 cents per share.
So, today will be the final day to secure this dividend, which will be paid on 24 October.
Although investors buying Nick Scali shares tomorrow won't scoop up the latest dividend, they'll likely be able to get their hands on shares at a reduced price.
This is because a company's shares typically drop on the day they turn ex-dividend as the value of the dividend leaves the share price.
After all, these dividends are being paid out of the company's cash reserves. As this cash balance diminishes, so too does the company's value.
The extent of the share price fall primarily depends on the size of the dividend. But it also varies according to investor sentiment and how the broader market is moving on that particular day.
Given that Nick Scali's final dividend equates to a yield of around 3.5%, it's likely that Nick Scali shares will be in the red tomorrow as they turn ex-dividend.
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How did Nick Scali fare in FY22?
The ASX 300 retail share handed in its FY22 results last month, headlined by an 18% jump in revenue which reached $441 million.
While impressive at first glance, this growth was driven by the acquisition of Plush, which was finalised on 1 November 2021.
The addition of Plush boosted Nick Scali's sales by $88.8 million across the financial year. Excluding this contribution, Nick Scali's revenue went backwards by 6%.
Needless to say, FY22 was a challenging year for Nick Scali. Around 55% of its store network was closed for three months due to COVID lockdowns. And in the second half, the ASX 300 furniture retailer battled widespread disruption to its supply chain. This was primarily due to lockdowns in China where many of its products are manufactured.
These operational challenges were reflected in Nick Scali's bottom line, with net profit after tax (NPAT) dropping 11% to $75 million.
However, because of the supply chain issues, some of Nick Scali's sales have simply been pushed into next year. The retailer ended FY22 with an elevated order bank of $185 million, which is 67% higher compared to the same time last year.
Despite profits falling, Nick Scali raised its annual dividends by 8% to 70 cents. It did so by cranking up its dividend payout ratio from 63% of underlying NPAT in FY21 to 76% in FY22.
Based on current prices, Nick Scali shares are flashing an eye-catching trailing dividend yield of 7.1%. With the benefit of franking credits, this yield dials up to 10.2%.
Nick Scali share price snapshot
The Nick Scali share price has fallen out of favour this year, tumbling 36% to sit at $9.84.
In comparison, the wider S&P/ASX 300 Index (ASX: XKO) has suffered a 15% fall.
Nick Scali currently has a market capitalisation of $795 million. This puts shares on a trailing price-to-earnings (P/E) ratio of roughly ten times.
