How is Elders’ (ASX:ELD) share price moving ex-dividend?

Highlights

• Elders Ltd. share price dips in red in early hours of trade.
• ELD shares have become ex-dividend today (30 May 2022).
• The company has paid an interim dividend of AU$0.280 a share.

Diversified Agribusiness Elders Ltd.’s (ASX:ELD) shares have gone ex-dividend today. Elders has paid an interim dividend of AU$0.280 per share as announced with its first half results for 2022. The present distribution is about 40% above the previous one paid in December 2021. Meanwhile, on the ASX, ELD share price closed dropping 2.845% at AU$13.145 a share.

How is dividend payment affecting ELD share price?

Often it is observed that after a company’s shares go ex-dividend, share price tends to drop. It is usually because on shares purchased after the ex-dividend date, share holders are not eligible to receive any dividend already declared. As a result, often investors tend to buy shares of those companies who have declared dividends but have not gone ex-dividend.

A similar scenario seems to be taking place with the shares of Elders Ltd. Today being its ex-dividend date, ELD share price has moved over 2.84% below Friday’s close. ELD shares have already lost over 13% in last five trade days.

Another note-worthy fact here is that Elders Ltd.’s dividends only offer a 30% franking. It means that on the remaining 70% of dividend, shareholders will have to pay tax. However, payment of dividend on ELD shares will only be made on 17 June 2022. Meanwhile, as of date, the annual dividend yield on ALD shares is 3.69%. Once the share price goes further down, the annual dividend yield will move further up, being reversely correlated to each other.

Did ELD improve its distribution?

Based on the semi-annual results for FY22, declared by Elders Ltd., this time it is paying almost 40% more than it had paid last year. The dividend hike seems to be coming from the 80% EBIT growth and increase in underlying earnings per share. In fact, Elders has even upgraded its guidance by to 30% to 40%.

In H1-22, Elders has reportedly outperformed the 2021 first half in all products and geographies. The rural sales were 47%, and Wholesale Product sale was up 27%. The company also saw growth across the Rural Products business due to strong demand for fertiliser and crop protection products. All of this appears to have contributed well to Elder’s hiked distributions this time.

Share price performance

Image source: ^© 2022 Kalkine Media ®, source-ASX website

ELD shares being ex-dividend as of date are adding on to the near-term losses. In last thirty day’s ELD share price is down over 6%. The share price movements are more relevant for those investors who have elected for the dividend reinvestment plan (DRP). Under the DRP these shareholders will see a few more shares getting added to their portfolios based on the 10-day volume-weighted average price from 31 May to 9 June.

As of date, Elder’s share price is still not far behind its 52-week high of AU$ 15.32 a share. Even the price earnings ratio is about 12.26.

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