The Insurance Australia Group Ltd (ASX: IAG) share price is falling today, and not just because the broader market is down.
The ASX financial stock is also lower because it's ex-dividend day.
The IAG share price fell to an intraday low of $7.31 on Thursday, down 2.4% on yesterday's close. The insurance stock is currently trading for $7.39, down 1.34%.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 0.38%.
Currently, the ASX financial sector is the only market sector in the green, so IAG is underperforming its peers. At the time of writing, the S&P/ASX 200 Financials Index (ASX: XFJ) is up 0.37%.
IAG did not release any price-sensitive news today.
Image source: Getty Images
IAG share price falls on ex-dividend day
IAG will pay a significantly higher final dividend due to boosted profits in FY24.
The insurer booked a net profit after tax (NPAT) of $898 million for FY24, up 7.9% from FY23.
IAG shares will pay a final dividend of 17 cents per share with 50% franking on 26 September.
That's 89% higher than the final dividend of FY23, which was 9 cents per share with 30% franking.
IAG's full-year dividend totalled 27 cents per share. This compares to 15 cents in FY23.
Based on the current IAG share price, that's an annual dividend yield of 3.65% plus partial franking.
Thinking of buying IAG shares?
If you buy IAG shares today, you will not be entitled to the next dividend payment. This is because the stock is now trading ex-dividend.
Stock prices tend to dip on ex-dividend days because without the dividend attached, they are worth inherently less.
However, the good news is that market analysts expect IAG's dividend payments and earnings per share (EPS) to rise from here.
According to the CommSec trading platform, analysts expect IAG's dividends to be 11% higher at 30 cents per share in 2025. They also predict EPS to rise from 36.2 cents per share to 39.6 cents per share.
In 2026, the analysts reckon the IAG dividend will be 18.5% higher than this year at 32 cents per share. They see EPS rising from 39.6 cents per share in 2025 to 42.7 cents per share in 2026.
The analysts have a consensus moderate buy rating on IAG at today's share price.
IAG share price snapshot
The IAG share price has risen significantly over the past two years.
On Monday, IAG hit a new 52-week high share price of $7.56.
Goldman Sachs has a neutral rating on IAG with a 12-month price target of $7.20.
