The Woolworths Group Ltd (ASX: WOW) share price is out of form on Thursday.
In morning trade, the retail giant's shares are down 2% to $38.13.
Image source: Getty Images
Why is the Woolworths share price falling today?
The good news for shareholders is that today's decline has nothing to do with a bad update or a broker downgrade.
This decline is almost entirely attributable to Woolworths' shares trading ex-dividend this morning for its upcoming payout.
When a share goes ex-dividend, the rights to a future dividend payment are settled and new buyers will not be entitled to receive it on payday.
Understandably, as you wouldn't want to pay for something you won't receive, a company's share price will tend to fall in line with the value of the dividend to reflect this.
The Woolworths dividend
As a reminder, last week Woolworths released its FY 2023 results and reported a 5.7% increase in sales to $64,294 million and a 13.7% lift in net profit after tax (before one-offs) to $1,721 million.
This strong bottom-line growth allowed the company's board to increase its fully franked final dividend by 9.4% to 58 cents per share. For the full year, this brought the Woolworths dividend to $1.04 per share. This represents an increase of 13% year on year.
If you're one of Woolworths' eligible shareholders, then you won't have long to wait for payday.
The company intends to pay its 58 cents per share final dividend late next month on 27 September. Based on the Woolworths share price at yesterday's close, this payout represents a reasonably attractive 1.5% dividend yield.
What's next?
According to a note out of Goldman Sachs, its analysts expect another increase in FY 2024.
They have pencilled in a fully franked dividend of $1.12 per share. After which, another increase to $1.22 per share is forecast for FY 2025.
Goldman currently has a buy rating and a $42 price target on the retailer's shares.
