Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
NHC have suffered a 2% drop this morning because the redemption rate to note holders has been decreased from $6.5468 to $6.2358. The dividend of .19c the cause of the redemption drop and subsequent share price fall. Could you please explain the correlation and if we will suffer a share price fall every time there is a dividend. Thank you for your excellent work. Terry
Hi Terence,
All things being equal, a stock will move like a sinusoidal wave, very slowly rallying after a stock trades ex-dividend before again gapping down after it trades ex-dividend, in a repetitive fashion like the Sine Wave. The move in price of NHC post dividend is more about holders selling after they have accrued the dividend, than the change in the note redemption price, as that change makes total sense. There is 19c per share less value in the business after it’s been paid out to shareholders. We note this was flagged in an afternoon note as the reason, however, on reflection, we would now not put the move down to this reason.
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