LONDON -- On the markets, today's opening bell could have heralded something of a mini-massacre. Not a fall of the order of yesterday's 24% collapse in the price of Standard Chartered, to be sure. But a decent nosedive, nonetheless.
As you'll now know, it didn't happen. In fact, on opening, the FTSE 100 (INDEX: ^FTSE ) fell 30 points -- a fall of 0.5%.
Over the weekend, the chat among bulletin-board doomsayers had been of a rather steeper fall. Twice that, at least. And that's before factoring in any economic, political or corporate news.
Let me explain. As I've written before, the interval between summer corporate results and the payment of dividends has become progressively shorter in recent times.
And today, a fair-sized proportion of the shares belonging to London's flagship FTSE 100 index went ex-dividend -- the date on which an investor has to hold the shares, at the start of trading, in order to collect the next dividend payout.
Buy or own the shares yesterday, in short, and you'll receive the dividend. Buy the shares today, and you won't. So, typically, a share falls on the day it goes ex-dividend -- and, logically enough, by roughly the amount of the dividend forgone.
Today, 16 shares from the FTSE 100 went ex-dividend, plus a clutch of investment trusts.
Worse, included in the list were some heavy-hitting dividend-paying shares, beloved of income investors. Royal Dutch Shell, for instance, which yields 4.8%, and makes up 4.2% of the FTSE 100. BP, which yields 4.3%, and makes up 5.6%. GlaxoSmithKline, yielding 4.8%, and making up 5.1%. And so forth.
In fact, totting up just the big players -- and ignoring smaller shares such as hotel group Millennium & Copthorne (yielding 2.6%) and insurance broker Hiscox (yielding 4%) -- a whopping 29% of the FTSE 100 went ex-dividend today. That's right: nearly a third of the FTSE went ex-dividend.
So where was the slump? How come the fall was just 30 points -- and not 130 points?
This is how we dodged the bullet.
First, the vast majority of the shares in question -- 13 by my reckoning -- were paying interim dividends, not full-year dividends. Typically, an interim dividend is 30%-40% of the full-year dividend, so that helps.
Second, of those paying full-year dividends, Pennon makes up just 2.2% of the FTSE 100 index, SABMiller just 2% and BT just 1.1%. Even lumped together, they're not a Shell, BP or GlaxoSmithKline.
Third, most of those heavy hitters -- Shell, GlaxoSmithKline, Unilever and BP -- pay quarterly dividends, not twice-yearly dividends, thus lessening the blow again.
Fourthly, embattled bank Standard Chartered -- another stock going ex-dividend -- actually rose by 6% today.
In fact, among the heavy-hitting dividend-paying shares in question, only Reckitt Benckiser and AstraZeneca have big payouts. And theirs were interim dividends.
In short, it could have been a lot worse. On the other hand, now that almost 30% of the FTSE has gone ex-dividend, there are bargains on offer.
Utility firm Pennon Group (on a P/E of 15, and yielding 3.6%) and Hiscox (on a P/E 8, and yielding 4%) look tasty to me. Each of them recorded decent falls, and offer the patient investor an attractive entry point, relative to the broader FTSE 100.
And one investor doubtless performing the same calculations is Neil Woodford, who looks after two of the U.K.'s largest investment funds, and runs more money for private investors than any other City manager.
A free special report from The Motley Fool -- "8 Shares Held By Britain's Super Investor" -- profiles eight of his largest holdings, and explains the investing logic behind them. Three of which, interestingly enough, went ex-dividend today, with two falling by 2% or more, representing a potentially very interesting entry point indeed.
Want to learn more about shares, but not sure where to start? Download our latest guide -- "What Every New Investor Needs To Know" -- it's free. The Motley Fool is helping Britain invest. Better.
More investing ideas from Malcolm Wheatley