The National Australia Bank Ltd (ASX: NAB) share price is taking a tumble on Tuesday.
In morning trade, the banking giant's shares are down 3% to $30.37.
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Why is the NAB share price dropping?
The good news for shareholders is that the weakness in the NAB share price has nothing to do with its performance or a bearish broker note.
Instead, it has everything to do with the bank's shares trading ex-dividend this morning for its final dividend of FY 2022.
When shares trade ex-dividend, it means that the rights to an upcoming dividend payment remain with the seller and will not transfer 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
Last week NAB released its full year results for FY 2022 and reported an 8.3% increase in cash earnings to $7,104 million. This was driven largely by its business and institutional banking operations, which offset a softer performance from NAB's personal banking business.
In light of its overall earnings growth in FY 2022, the NAB board declared a fully franked final dividend of 78 cents per share. This brought the bank's full year dividend to 151 cents per share, which was an increase of 18.9% year over year.
Commenting on the dividend, NAB stated:
NAB is making excellent progress on our strategy and the Board is encouraged to see the operational results that this is delivering. This is reflected in improved earnings with all businesses contributing to underlying profit growth, and significant and sustainable momentum across the Group. Our most recent colleague engagement score is 76, compared with 77 in July 2021, and is close to the latest top quartile score of 78. Taking all this into account, the Board has determined dividends for the year of 151 cents per share, returning $4.8bn in total to shareholders.
When is payday?
Eligible NAB shareholders can now look forward to being paid this 78 cents per share final dividend in just under a month on 14 December.
The NAB share price is up 3% in 2022 despite today's decline.
