Dividends

  • Does Fortrade credit or debit positions for Dividends on Stock CFDs?

    Yes, Fortrade will credit/debit open positions on stock CFDs when a Dividend is paid.

    Account Verification Process
  • Why does a Dividend affect the stock CFD price?

    When a Dividend is paid, the company’s value is immediately affected for the simple reason that the cash it is giving out as a Dividend will no longer belong to the company, so the share price decreases in line with the Dividend payment. The change in the share’s price takes place on the ex-Dividend date.

    Account Verification Process
  • What is a Dividend?

    A Dividend is a way for a company to distribute its net earnings to its shareholders. The Dividend amount is decided by the company’s board of directors, and can be issued as a cash payment, shares or other assets.

    Account Verification Process
  • How does the Dividend Adjustment Work?

    Fortrade needs to credit/debit its clients holding the Dividend paying share during the ex-date, in order to cover for the paid Dividend.

    All client holding a Dividend paying share in a short position during the ex-Dividend day will be debited.
    For example:

    If you hold 1,000 shares in a short position in an opening price of $110 while the current market price is $100, and the paid Dividend is equal to $2 per share  The share price will drop $2 on the ex-dividend day, meaning that you will earn more money on your short position due to the share price movement, so Fortrade will have to charge that exact amount. (No further fees or commission) This will show as commission.

    P&L before the ex-dividend day: 1,000 * (110 – 100) = $10,000 No. of shares * (opening price – market price before the dividend payout)

    P&L after the ex-dividend day: 1,000 * (110 – 98) = $12,000
    No. of shares * (opening price – current market price)
    (Assumes there were no other change in the share price)

    Dividend charge: 1,000 * $2 = $2,000
    No. of shares * dividend paid per share

    Final P&L calculation: 1,000 (110 – 98) – 2,000 = $10,000
    No. of shares * (opening price – current market price) – Dividend amount

    All client holding a dividend paying share in a long position during the ex-dividend day will be credited.
    For example:

    If you hold 1,000 shares in a long position in an opening price of $90 while the current market price is $100, and the paid dividend is equal to $2 per share. The share price will drop in $2 in the ex-dividend day, meaning that you will lose money on your long position due to the share price movement, so Fortrade will have to credit you with that exact amount. (No further fees or commission) This will show as commission.

    P&L before the ex-dividend day: 1,000 * (100 – 90) = $10,000 No. of shares * (market price before the dividend payout – Opening Price)

    P&L after the ex-dividend day: 1,000 * (98 – 90) = $8,000
    No. of shares * (Current market price – Opening Price)
    (Assumes there were no other change in the share price)

    Dividend credit: 1,000 * $2 = $2,000
    No. of shares * dividend paid per share

    Final P&L calculation: 1,000 (98 – 90) + 2,000 = $10,000
    No. of shares * (Current market price – Opening Price) + Dividend amount

    Account Verification Process
  • Where will any Dividend Adjustments be shown on my account?

    All dividends credits/charges will appear in the “commission” column of the relevant position.

    Account Verification Process
  • Where can I find the dividends distribution dates for stocks?

    Fortrade will publish the dividends calendar on the website along with the expected amounts, but cannot be responsible for any changes made by the companies. You are responsible for checking the website of the company you hold CFD stocks on for any dividend announcements. The information can also be found on any finance news websites (Yahoo Finance, Bloomberg, Reuters).

    Account Verification Process
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 86.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.