- Glencore shares drop 4.5%
- Stock traded ex-dividend today
- Recent first-half results saw profits halve
Casual observers might have taken a quick look at the share price action in Glencore (GLEN) today and assumed there had been some bad news from the company.
The shares dipped 4.5% to 418.9p – not far from the company’s 52-week low of just under 411p. However, the reason for the latest slump in the stock is actually technical. Glencore shares went ex-dividend this morning, or in other words they traded without the rights to the latest declared dividend payment.
Companies and funds will publish dates in their financial results that specify the timetable for dividend payments. The ex-dividend date is the most important. This is the point at which the share price will adjust to assume the money had been allocated to the qualifying investors. You need to own the shares [ITALICS] before [ENDS] this date to qualify for the dividend.
On the ex-dividend date itself the shares typically drop by the rough amount of the dividend per share – often ex-dividend dates fall on a Thursday and it is worth double checking if you’re unsure why a stock has fallen to see if an ex-dividend date is the culprit. Occasionally when several large companies go ex-dividend at the same time it can make a meaningful contribution to the trajectory of the FTSE 100.
In Glencore’s case, it declared a $0.30 payment (roughly 23.7p in sterling terms) which went ex-dividend today (31 August) and the shares have dropped 19.75p.
GLENCORE NUMBERS NORMALISED AFTER EXCEPTIONAL 2022
The dividend was declared alongside a disappointing set of first-half results (8 August), partly reflecting a normalisation of commodity markets which had surged thanks to Russia’s invasion of Ukraine in 2022.
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The diversified mining and commodity trading company saw earnings coming in at around $9 billion, 15% below analyst consensus and a staggering 50% lower year-on-year. Glencore has also not been helped by a slower than expected post-Covid recovery in China – one of the world’s thirstiest consumers of resources.
Jefferies analyst Christopher LaFemina remains confident in the long-term potential of the business. He said: ‘We continue to like Glencore based on its commodity mix, valuation, and aggressive approach to strategically sensible and value-enhancing M&A.’
