Dividends
CFD's, much like the underlying stocks, are subject to dividend adjustments.
Dividends
A dividend is when a company gives away a fraction of their earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, shares of stock or other property.
A dividend rate may be in dollar amount of each share receives (DPS, dividends per share). In addition, a dividend yield can be quoted in terms of a percent of the current market price. Thus, a company’s net profits can be allocated to shareholders via a dividend or kept within the company as retained earnings. Payments of dividends must be approved by the shareholders and can be shown as a one-time special dividend or as an ongoing cash flow to owners as well as the investors.
As a single stock dividends example:
A client is long 10 CFD’s of Twitter and a $0.07 dividend has been declared. If a client holds an open position until the ex-div date they will receive the dividend which equates to a credit of $0.70 (10*$0.07=$0.70).
A client is short 10 CFD’s of Twitter and a $0.07 dividend has been declared. If a client holds an open position until the ex-div date, they will pay the dividend which equates to a debit of $0.70 (10*$0.07=$0.70).
A dividend rate may be in dollar amount of each share receives (DPS, dividends per share). In addition, a dividend yield can be quoted in terms of a percent of the current market price. Thus, a company’s net profits can be allocated to shareholders via a dividend or kept within the company as retained earnings. Payments of dividends must be approved by the shareholders and can be shown as a one-time special dividend or as an ongoing cash flow to owners as well as the investors.
As a single stock dividends example:
A client is long 10 CFD’s of Twitter and a $0.07 dividend has been declared. If a client holds an open position until the ex-div date they will receive the dividend which equates to a credit of $0.70 (10*$0.07=$0.70).
A client is short 10 CFD’s of Twitter and a $0.07 dividend has been declared. If a client holds an open position until the ex-div date, they will pay the dividend which equates to a debit of $0.70 (10*$0.07=$0.70).
As an indices dividends example:
A client is long 2 CFD’s of DOW30 and the constituent companies are paying dividends which equate to 3 index points. If a client holds an open position until the ex-div date they will receive the dividend which equates to a credit of $35(2*3=$6).
A client is short 2 CFD’s of DOW30 and the constituent companies are paying dividends which equate to 3 index points. If a client holds an open position until the ex-div date they will pay the dividend which equates to a debit of $ (2*3=$6).
A client is long 2 CFD’s of DOW30 and the constituent companies are paying dividends which equate to 3 index points. If a client holds an open position until the ex-div date they will receive the dividend which equates to a credit of $35(2*3=$6).
A client is short 2 CFD’s of DOW30 and the constituent companies are paying dividends which equate to 3 index points. If a client holds an open position until the ex-div date they will pay the dividend which equates to a debit of $ (2*3=$6).
* For clients with positions in total return indices, dividend values are automatically reflected in the price of the index. E.g. Clients who have positions in CFD DAX30 not be debited/credited as dividends.
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