The S&P/ASX 200 Index (ASX: XJO) is once again off to the races this morning. After rising 0.6% yesterday, the ASX 200 has put on another 0.42% at the time of writing. But let's talk about the Insurance Australia Group Ltd (ASX: IAG) share price, which doesn't seem to be joining the party today.
Yesterday, IAG shares closed at $5.75 each. But today, IAG is going for $5.74 at the time of writing, a fall of around 0.1% on yesterday's close.
So what's up with the IAG share price today that has resulted in this ASX 200 insurance share missing out on the market's gains?
Well, the answer is a happy one for IAG shareholders. Investors are seeing a drop in IAG shares today thanks to the company trading ex-dividend for its upcoming shareholder payment.
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IAG share price falls as company trades ex-dividend
Last week, we discussed IAG's latest earnings report, covering the full 2023 financial year. As we covered at the time, these earnings saw IAG report an 8.2% rise in revenues for FY23 up to $19.85 billion. Gross written premiums rose by 10.6% to $14.7 billion, while net profits after tax (NPAT) swelled by a massive 139.8% to $832 million.
This enabled IAG to declare a final dividend for 2023 of 9 cents per share, partially franked at 30%. That's almost double IAG's final dividend of 5 cents per share last year. It's also a big rise over March's interim dividend of 6 cents per share.
However, eligibility for this dividend has just closed for new investors, thanks to the IAG share price trading ex-dividend today. This means any shareholder who owned IAG shares as of yesterday's market close will be in line to receive this latest, supersized dividend from IAG. But those investors who buy IAG shares from today onwards miss out.
This is why we are seeing weakness in the IAG share price today. This normally happens when a share trades ex-dividend, and represents the value lost from this dividend being shut off for new investors.
Eligible IAG investors can now look forward to receiving the company's latest dividend next month on 28 September.
The IAG share price remains up a healthy 23% or so in 2023 so far. At the current pricing, IAG shares offer a dividend yield of 2.62%.
