- December 12, 2021
- Posted by: Robert Brown
- Category: Investing
Discover the Power behind leveraging your CFD Dividend Strategy.
Smart traders know the power of leveraging their returns in a safe way and now you can learn how to do the same.
Today we are going to have a look at some CFD Dividend trading basics and how you can easily secure your dividends whilst trading Contracts for Difference.
CFD Dividends replicate the underlying market which means if a stock you are trading pays a certain dividend then the CFD will pay that amount as well.
Let’s say you had 500 Rio Tinto CFDs and it paid a $1 dividend, then you would be credited $500 to your CFD trading account.
At what point do I get a CFD Dividend credit?
Unlike the normal ASX stock market, you don’t actually have to wait for the payment date to get paid your dividend.
Your CFD dividend typically gets paid the day after the ex dividend date so long as you held it over the ex-div date.
Multiply your dividend by 3 times using leverage
In order to multiply your returns you need to start leveraging your account and CFDs provide this advantage. Most stocks only require 10% initial margin.
As a result of this leverage you can dramatically increase your trading returns.
If you leverage your normal position size by 3 times then a dividend of around $500 would now turn into a $1,500 credit. Powerful stuff isn’t it.
Do the tax benefits of franking credits apply to CFDs?
Unlike the normal share market, CFDs do not pay franking credits.
A stock market company can decide to pay the tax prior to passing the credit onto you which means the dividend is fully franked.
CFDs do not receive any franking credits and on the Australian Stock Exchange you need to hold a stock for 45 days to be entitled to the franking credit anyway.
Many successful CFD traders take full advantage of the CFD Dividend play in order to increase their share market returns.
Step up and build it into your strategy today.