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The Washington H. Soul Pattinson & Company Ltd (ASX: SOL) is facing downward pressure on its share price once again this Wednesday. the investment firm's shares have dipped by 0.42% to close at AU$33.33.
Contrary to recent sessions, today's decline is arguably a positive development for shareholders. The dip is attributable to the company's shares going ex-dividend this morning.
When a share trades ex-dividend, it indicates that the rights to an upcoming dividend are now locked in. Consequently, if one purchases its shares on this day, they would not be entitled to receive the dividend on pay day. Instead, the dividend would be received by the seller of the shares, even though they won't possess them when the payment is made.
Since a dividend constitutes part of a company's valuation, its share price typically adjusts downward on the ex-dividend day. After all, investors wouldn't want to pay for something they won't receive.
Exploring Soul Pattinson's Dividend
Last month, the investment company unveiled its half-year results, reporting a 33.2% decline in profit to AU$302.5 million. Despite this, the company's board continued its streak of increasing dividends.
Soul Pattinson declared a fully franked interim dividend of 40 cents per share, marking an 11.1% increase from 36 cents per share last year. Remarkably, this marked the 24th consecutive year of dividend growth for the company.
Based on the Soul Pattinson share price at the previous day's close, this translates to a modest yet relatively attractive dividend yield of 1.2% for eligible shareholders.
Eligible shareholders can anticipate the dividend payment in under a month, scheduled for May 10.
What Lies Ahead?
According to recent analysis from Morgans, analysts are anticipating total dividends of 94.1 cents per share in FY 2024, up 8.2% from 87 cents per share in FY 2023.
If Morgans' estimate proves accurate, investors can expect a dividend declaration of 54.1 cents per share in September, paid out in November. With the current share price, this final payout would result in a 1.6% dividend yield.
