Dividends and CFDs

Submitted by Share Trading on 26 March, 2008 - 07:50

Dividends and CFDs
Since I don't own the stock, am I paid the dividend when I hold the CFD? What happens then the company gives out a dividend and I'm holding the shares?

CFDs over stocks have many of the benefits of holding the physical underlying company stocks. CFDs don't give the holder of the contract voting rights or franking credits. Most CFD providers will credit you a portion or all of the dividend, given that you are holding a long position with your CFDs when the company goes the ex-dividend. Check with your CFD provider's help desk or Product Disclosure Statement on the policies of how the dividend process works for your particular CFD provider.

The general consensus with trading CFDs over the ex-dividend is if you are long, you will receive a dividend and if you are short, your account will be debited the dividend amount. Some people do consider CFD trading strategies surrounding these events and other corporate actions like share bonus issues, subdivisions, consolidations, rights issues and reclassifications.

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