BUX pays out/charges dividend at market close the day before the ex-dividend date


You can find this ex-dividend date on the corporate website of a company - for example, if you read that Hewlett Packard Enterprise Company's ex-dividend date is on December 12th - to receive dividend you must open a LONG position in HP before 20:59 (GMT) of the day before. Note: if you open a SHORT position before this time, the cash correction will be negative (in other words: in this case you will be charged dividend).  


How does dividend work with CFD's? 


When you hold a CFD, the dividend you will be entitled to will depend on the size of your trade and not on how many shares you hold (you don't hold the actual share, but a CFD contract that follows the price of the underlying share). Let's say that Barclays shares are at 100, and the dividend the company pays out is £3.5 per share - if you have invested 100 with the arrow UP (LONG), you technically would have 1 whole share. This means that your dividend would be £3.5. 


As the size of your CFD trade isn't usually 1:1 with the share price (as in the example above), some calculation needs to be made


Let's say that Barclays price is £245.58 per share and that you invested £100 in a LONG position - then the value of your trade would not be 1:1 with the share value, but 40.72%, because:


100 / 245.58 (x 100) = 40.72%


To calculate how much dividend you are entitled to, the calculation is as follows:


(Barclays dividend per share) £ 3.5 × (your Barcleys trade size) 0.4072 = 1.4 


In the example above, you would be entitled to £1.4 dividend. 


Naturally, the same calculations apply for SHORT trades (arrow DOWN), that is to calculate how much dividend you will be charged. 


For an in-depth - and fun - article about why and how much dividend companies pay and what that means for share-holders, visit our blog.


Questions left? Contact us at BUX Support.